As the income tax deadline of October 31st 2010 approaches, Australian citizens who are currently living and working abroad have been reminded of recent changes to laws governing the payment of taxes in their native country.
As of the 1st July 2009 offshore Australian resident employees are no longer exempt from Australian income tax and are required to pay income on their earnings, even though they were gained from employment abroad. It is anticipated that the new laws will impact between 15,000 and 20,000 Australians each year.
Overview of the new tax laws-
- All income generated from foreign employment is now fully accessible for tax in Australia, with any taxation that has been paid in their host country being credited against the amount owed to their country of residence. However, such a credit will only be applied once proof of taxation in the host country is produced, something that may cause a number of issues for expatriates who live in countries where such documentation is not readily produced.
- Any expatriate working in a country where the tax rate is lower than that of Australia, will be liable to pay the difference in Australia.
- Australian expats are responsible for documenting their earnings and tax deductions and will be required to provide evidence of both when submitting their tax assessment. It is anticipated that this will incur additional compliance costs and professional service fees for Australian residents who are working outside of the country.
- Any expatriates who spend more than 183 days out of the country will be deemed non-residents for tax purposes.
How to file your tax return from abroad-
- Tax returns must be completed in full by the 31st October 2010.
- The tax you are required to pay will be determined by your residency status. If you are unsure about your residential status please consult the residency overview pages.
- Expatriates who are required to complete a tax submission should register for a Taxpack immediately in order to ensure that they allow sufficient time to collect all necessary documentation.
- Returns can be made either by the online eTax system or through completing a paper submission.
- Regardless of the process used, the final return should be printed out, signed and returned to:
Australian Taxation Office GPO Box 9845 In your capital city. (If you have registered for Taxpak a self-addressed envelope will havebeen sent to you with the supporting literature)
- Any expatriates who are require additional help with their submissions, or who required professional advice should contact the Australian tax office directly.
Please note that this article is intended as a high level guide to the taxation process for Australian residents living overseas. If you have any questions regarding you taxation status you should contact the ATO directly and should always ensure that you seek professional advice when filing your tax return.