Non-Resident Taxation

Non-resident tax rates (2025-26 and 2026-27)

Non-residents have no tax-free threshold and are taxed at flat marginal bands. The 2026-27 resident rate reductions (16% to 15% on the $18,201 to $45,000 band) do not extend to non-residents. These rates are confirmed unchanged for both income years.

Australian-source income only

Non-residents are taxed on Australian-source income. This typically includes employment performed in Australia (salary, wages, bonuses), business income from a business carried on in Australia (with or without a PE), rental income from Australian real property, dividends paid by Australian resident companies, interest paid by Australian borrowers, and royalties for use of intellectual property in Australia. Foreign-source income is generally outside Australian tax for non-residents. The determination of whether income is Australian-sourced follows general principles: employment income is sourced where the work is physically performed, business income where the business is carried on, and passive income typically where the payer is located or the asset is situated.

Withholding on interest, dividends, and royalties

Non-resident withholding tax (NRWT) applies at different rates depending on the income type and any applicable DTA.

Franked dividends and franking credits

Fully franked dividends attract 0% NRWT on the franked portion. Company tax has already been paid, and the imputation system means no withholding is required. Any unfranked portion is subject to NRWT as described above. Non-resident individuals cannot claim or receive a refund of franking credits. The credits simply do not flow through to the non-resident shareholder. This is a fundamental difference from the treatment of resident shareholders, who can use franking credits to reduce their tax or receive a refund.

CGT and taxable Australian property

Non-residents are only subject to CGT on taxable Australian property (TAP). TAP includes direct interests in Australian real property (land, buildings, leasehold), assets used in an Australian PE (business assets of an Australian branch), and indirect Australian real property interests (significant interests in companies or trusts where value is principally attributable to Australian real property). From 8 May 2012, non-residents generally cannot access the 50% CGT discount on gains accruing during periods of non-residency. Assets held before that date have complex apportionment rules that can preserve the discount for the pre-May 2012 portion. Since 1 July 2020, the main residence CGT exemption is generally unavailable to foreign residents at the time of the CGT event, with limited carve-outs for terminal illness, death, and divorce where the individual has been a foreign resident for less than six continuous years.

Property sale withholding (FRCGW)

Under the foreign-resident capital gains withholding regime, when a non-resident sells Australian property and does not provide a valid ATO clearance certificate, the purchaser must withhold a percentage of the purchase price and remit it to the ATO. For 2025-26, the rate is 12.5% on contracts entered before 1 January 2025 and 15% on contracts from that date. The dollar threshold ($750,000) has been removed for new contracts from 1 January 2025. This withholding is not a final tax. The vendor lodges an Australian return, calculates the actual CGT liability, and claims credit for the amount withheld. If the withholding exceeds the actual liability, the excess is refunded. If the liability exceeds the withholding, the balance is payable. The obligation is on the purchaser, and it is mandatory when no clearance certificate is provided.

Medicare and superannuation (DASP)

Non-residents are not liable for the 2% Medicare levy and typically do not incur the Medicare Levy Surcharge. Practical access to Medicare normally ceases when you leave Australia permanently. Temporary residents who worked in Australia and contributed to super while holding eligible temporary visas can claim DASP after their visa has expired or been cancelled and they have left Australia. DASP is not automatic and must be applied for through the super fund or via the ATO DASP portal. Tax is withheld at flat DASP rates, which differ by component and whether contributions were WHM or other temporary resident. Australian citizens and permanent residents who later become non-resident cannot use DASP.

Statute references

• Income Tax Rates Act 1986 (non-resident tax rates schedule)
• ITAA 1997 Division 855 (CGT for non-residents, taxable Australian property)
• ITAA 1997 Division 115 (CGT discount restrictions for foreign residents)
• ITAA 1997 Division 118 (main residence exemption, removal for foreign residents from 1 July 2020)
• TAA 1953 Schedule 1 Subdivision 14-D (foreign-resident CGT withholding)
• ATO non-resident guide (income types, withholding, lodgement)
• ATO DASP information (departing superannuation payment)
• ATO clearance certificate process (FRCGW)

Frequently asked questions