For educational purposes only. Not tax, legal, or financial advice. Tax laws change frequently. Consult a registered tax agent or CPA for your specific situation.

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    TaxKiln Australia
    TaxKiln

    Expat Australians Working Overseas

    Maintaining versus breaking Australian tax residency, the ATO's assertive stance under TR 2023/1, s 23AG's narrow scope, FITO on worldwide income, super contributions while overseas, HELP/HECS obligations, and DTA tie-breakers by common destination.

    Whether an Australian working overseas remains a tax resident hinges on whether they have established a permanent place of abode outside Australia under the domicile test. The ATO has become noticeably assertive: stays under approximately two years rarely establish overseas residency, while three or more years with strong overseas ties and weakened Australian ties make non-residency more likely (per TR 2023/1). The s 23AG foreign employment income exemption, once broadly available, now applies only to employees in development aid, qualifying charity work, and disciplined force deployment. Self-employed expats who remain Australian tax residents must declare worldwide business income and claim FITO for foreign tax paid.

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact ATO. Read our editorial scope →

    Residency: the key question for expats

    The four Australian residency tests (resides, domicile, 183-day, Commonwealth super) apply to outbound Australians. Satisfying any single test makes you a resident. For most expats, the domicile test is decisive. Australians retain an Australian domicile of origin unless they acquire a new one. The critical question is whether you have established a permanent place of abode outside Australia. The ATO considers intended and actual length of stay overseas plus continuity, whether you have established a home overseas (lease or ownership, furnished, utilities connected), whether you retained an Australian home and how it is used (vacant versus long-term rented out), location of immediate family, location of key assets and business interests, and social and community ties in each country. TR 2023/1 consolidates the ATO's guidance. Stays under approximately two years are unlikely to establish a permanent place of abode overseas. Stays of three or more years with strong overseas ties and weakened Australian ties make non-residency more likely. The test is always holistic and fact-specific. The ATO has become noticeably assertive in recent years, and many outbound Australians who believe they are non-residents are still residents on the ATO's view.

    Tax outcomes: resident versus non-resident

    If you remain an Australian tax resident, all worldwide income is assessable: foreign self-employment and business income, foreign employment income, foreign investment income and rental, and Australian-source income. Where foreign tax has been paid, claim FITO under Division 770 to relieve double taxation. If you genuinely cease residency, you are taxed in Australia only on Australian-source income and CGT on taxable Australian property. Non-resident rates apply (no tax-free threshold, 30% from the first dollar up to $135,000). Foreign-source self-employment income falls outside the Australian tax net entirely. The difference can be substantial for high-earning contractors working in low-tax jurisdictions.

    Dual residency and DTA tie-breakers

    It is common for expats to be resident under both Australia's and the host country's domestic law simultaneously. DTAs include tie-breaker rules applied successively: permanent home (where you have one available), centre of vital interests (where personal and economic relations are closer), habitual abode (more regular presence), nationality, and mutual agreement between tax authorities. If the treaty assigns you as resident of the other country, Australia must limit its taxation rights per the treaty, typically taxing only Australian-source income and granting relief for double-taxed income. The tie-breaker determination is fact-specific and can change year to year if circumstances shift.

    Foreign employment income exemption (s 23AG)

    Section 23AG of the ITAA 1936 provides an exemption for certain foreign employment income where the individual is an Australian resident engaged in continuous foreign service for 91 days or more. Since 1 July 2016, the exemption has been significantly narrowed to employees in qualifying activities only: development projects (Australian official development assistance), foreign aid, and disciplined force deployment. Routine private-sector foreign employment generally does not qualify. Self-employed expats cannot use s 23AG at all. For the vast majority of Australian contractors and freelancers working overseas, foreign business income is fully assessable if they remain Australian tax residents, with relief through FITO only.

    Medicare while overseas

    Australian tax residents generally pay the 2% Medicare levy regardless of where they live. If you are a foreign resident for tax purposes for the entire year, you can claim a full exemption. Part-year residents can claim a proportional exemption for the non-resident period. Practical access to Medicare benefits may cease when you are overseas long-term, even if you remain a tax resident. Citizenship alone can support re-enrolment when you return. Reciprocal Health Care Agreements (RHCAs) with several countries, including the UK, provide limited medically necessary treatment during temporary stays overseas.

    Superannuation while overseas

    Self-employed individuals are never required to pay SG for themselves, regardless of residency. You can generally make personal concessional and non-concessional contributions to an Australian complying fund while overseas, provided the fund rules allow it and caps, age, and TFN conditions are met. Concessional contributions (up to $30,000 for 2025-26) are deductible against assessable income for tax residents. Australian employers must continue to pay SG for employees sent temporarily overseas. A non-resident employer for work wholly outside Australia is generally not required to pay SG. Existing super remains invested in Australia and subject to usual tax rules on fund earnings and benefits, regardless of your personal residency status.

    Common destinations and DTA notes

    The treaty position varies significantly by destination.

    Statute references

    • ITAA 1936 s 6(1) (four residency tests)
    • ATO TR 2023/1 (updated residency guidance, consolidates IT 2650 and IT 2681)
    • ITAA 1936 s 23AG (foreign employment income exemption, narrowed since 2016)
    • ITAA 1997 Division 770 (Foreign Income Tax Offset)
    • ITAA 1997 s 104-160 (CGT event I1, deemed disposal on ceasing residency)
    • ITAA 1997 Division 855 (taxable Australian property for non-residents)
    • ATO HELP overseas debtor guide (notification and reporting obligations)
    • Treasury DTA texts by country

    Frequently asked questions

    I have been overseas for 18 months. Am I still an Australian tax resident?+
    Very likely yes. The ATO's guidance (TR 2023/1) indicates that stays under approximately two years rarely establish a permanent place of abode overseas. If you retain an Australian home (even rented out), have family in Australia, maintain Australian bank accounts and super, and have not established a settled, long-term base overseas, the domicile test keeps you as an Australian tax resident. To cease residency, you generally need an extended overseas stay (three or more years is the indicative threshold), a settled overseas base, termination of your Australian accommodation, and a clear break from Australian ties.
    I am a self-employed Australian contractor working in the UAE. There is no DTA. How does double tax work?+
    Without a DTA, relief from double taxation relies entirely on Australia's unilateral FITO rules under Division 770. If you pay tax in the UAE (which generally does not impose income tax on individuals), there is no foreign tax to offset. Your worldwide business income is assessable in Australia at standard resident rates. Residency disputes are decided solely under Australian domestic law. The UAE's lack of income tax means there is no double tax problem, but there is also no DTA tie-breaker if the ATO considers you still resident.
    Can I make super contributions to my Australian fund while living overseas?+
    Yes, subject to conditions. Self-employed individuals are never required to pay SG for themselves, regardless of residency. However, you can generally make personal concessional and non-concessional contributions to an Australian complying fund while overseas, provided the fund rules allow it and you meet the caps, age, and TFN conditions. Concessional contributions are deductible against assessable income if you are still an Australian tax resident. If you have ceased residency, deductibility and caps require careful management, and foreign pension laws in your host country may create additional complications.
    My employer has sent me overseas temporarily. Do they still pay super?+
    Australian employers must continue to pay Superannuation Guarantee for employees sent temporarily overseas. If you are employed by a non-resident employer for work wholly outside Australia, that employer is generally not required to pay SG. Your existing super remains invested in Australia and subject to the usual tax rules on fund earnings and benefits, regardless of your personal residency status.

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