Australian Tax

Relocating to Australia brings opportunities, but also tax challenges. Without planning, new residents can face high tax rates, including income tax up to 45% plus a 2% Medicare levy.

The Australian tax year runs from 1st July to 30th June each year and any tax returns are due by 31st October.

Australian Tax Rates: until 30th June 2026

CGT & Income up to: 47%

Capital Gains & Income:

In Australia, income is taxed on a sliding scale with a top rate of 45% + 2% (Medicare levy).

Corporation & Family Trusts:

Holding companies & trusts allow for income to be strategically distributed to maximise a family’s tax allowances.

Australia taxes individuals based on residency rather than their citizenship. Once you are considered an Australian tax resident, you are liable for taxes on your worldwide income. This includes:

• Salary and wages
• Rental income from overseas property
• Investment returns from foreign accounts
• Pensions and retirement income from abroad

Non-residents are only taxed on Australian-sourced income, often at higher rates with no tax-free threshold.

Medicare levy

A Medicare Levy of 2% of taxable income is payable by resident expats for health services (provided that they qualify for Medicare services).

Australia Tax, who pays?

A foreign tax resident working in Australia, you declare on your tax return any income you earned in Australia, including:

• Employment income
• Rental income
• Australian pensions and annuities, unless an exemption is available under Australian tax law or a tax treaty
• Capital gains on Australian assets

As a foreign tax resident:

• You aren’t entitled to the tax-free threshold. This means you pay tax on every dollar of income you earn in Australia.
• You don’t pay the Medicare levy
• You don’t declare any Australian-sourced interest, dividends or royalties you derive while you are a foreign tax resident, provided the Australian financial institution or company that pays you has already withheld tax.
• Australian tax residents with a tax file number generally pay a lower rate of tax than foreign tax residents.

Residency Definition

Generally, A resident is typically defined as someone residing in Australia in the ordinary sense, and must meet at least one of the following criteria:

• Domiciled in Australia, unless the tax authority is convinced that their permanent home is outside Australia.

Physically present in Australia continuously or intermittently for more than half the tax year, unless the tax authority is assured that their usual residence is outside Australia and they do not intend to stay.

Meeting the residency tests can be straightforward. For instance, a person in Australia for employment for as little as six months may qualify as a tax resident.

A non-resident is someone who does not meet any of the above criteria.

A temporary resident is defined as an individual who:

• Is working in Australia on a temporary resident visa.
• Is not a resident for social security purposes (which includes Australian citizens, permanent residents, special visa categories like refugees, and certain New Zealand citizens).
• Has a spouse (legal or de facto) and other dependents who are also not residents for social security purposes.

Making the Right Decisions

For expats, the key is balancing offshore strategies such as investment wrappers with local solutions like superannuation. The correct mix can protect assets, reduce tax, and provide long-term flexibility.

Take the Next Step

The right advice can make a significant difference to your financial future in Australia. Speak with the experts at Oreana Private Wealth to create a personalised plan that works for you and your family. Contact us today to get started.