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.
Australian-based digital nomads who maintain a home, family ties, and bank accounts in Australia are generally treated as Australian tax residents under the domicile test, even when spending extended periods overseas. As a tax resident, worldwide income (including foreign client payments, platform revenue, and overseas employment) must be declared on your Australian return. Foreign income tax offsets (FITO) prevent double taxation on income taxed overseas. Services supplied to non-resident clients and consumed outside Australia can qualify as GST-free exports, meaning 0% GST charged while retaining input tax credit claims.
Last reviewed:
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 →
If you keep an Australian home, have family here, maintain a bank account and super fund, and intend to come back, you are almost certainly still an Australian tax resident regardless of how many months you spend overseas. The ATO taxes Australian residents on worldwide income. That means your Bali coworking fees, Portuguese client payments, and YouTube ad revenue all end up on your Australian tax return. The upside: foreign tax offsets prevent double taxation, GST-free export rules can eliminate GST on services to overseas clients, and business equipment is deductible wherever you use it.
The reality this serves
Self-employed Australians (freelancers, consultants, content creators, SaaS operators) who work remotely from overseas locations for extended periods while keeping their Australian base. The cohort includes people rotating through co-working spaces in Southeast Asia or Europe, couples travelling while one or both work remotely for Australian clients, and creators earning platform income (YouTube, Patreon, affiliate commissions, app store revenue) while living abroad. Most have no intention of permanently emigrating and maintain strong ties: Australian home (owned or leased), spouse or children in Australia, super fund, and bank accounts.
Australian tax residency tests and the domicile trap
The ATO applies four residency tests: the resides test (ordinary concepts), the domicile test, the 183-day test, and the Commonwealth superannuation test. Satisfying any single test makes you an Australian tax resident for that period. For most digital nomads, the domicile test is decisive. If your domicile is in Australia and you have not established a permanent place of abode overseas, you are treated as a resident even if you spend the entire year abroad. Factors the ATO examines: having an Australian home available for your use, family remaining in Australia, Australian bank accounts and super fund, enrolled children in Australian schools, and the intention to return. Simply travelling constantly or living in Airbnbs overseas rarely proves a permanent place of abode outside Australia. Recent ATO rulings emphasise that a settled overseas base with a clear, demonstrable break from Australia is required to cease residency. The 183-day test mostly supports (rather than replaces) the domicile analysis and catches people physically present in Australia for more than half the year.
A person whose domicile is in Australia is a tax resident unless they have established a permanent place of abode outside Australia.(ITAA 1936 s 6(1) (definition of resident); ATO TR 2023/1 (tax residency guidance))
Foreign income, FITO credits, and avoiding double tax
As an Australian tax resident, your worldwide income is assessable. Where that income is also taxed overseas (either at source through withholding or by filing a local return), Australia provides a foreign income tax offset (FITO) to prevent double taxation. The FITO offsets Australian tax payable on the same income, dollar for dollar, up to the amount of Australian tax that would otherwise apply. If the foreign tax rate exceeds the Australian rate, the excess credit is wasted (not refundable, not carried forward). If the foreign rate is lower, you pay the difference to the ATO. Common scenarios: US withholding on YouTube royalties (typically 15% under the Australia-US DTA), European client payments where local tax is withheld, and host-country income tax obligations triggered by extended stays. Keep records of foreign tax paid (withholding certificates, foreign tax returns) to substantiate FITO claims. Double tax agreements (DTAs) between Australia and the host country determine which country has primary taxing rights on specific income types. Where a DTA exists, it usually allocates service income to the country of residence (Australia), with the host country limited to taxing income only if you have a fixed base or permanent establishment there.
Australian residents receive a foreign income tax offset for foreign tax paid on income that is also assessable in Australia, preventing double taxation.(ITAA 1997 Division 770 (foreign income tax offset); ITAA 1936 s 6AB (foreign income definition))
GST-free exports of services to overseas clients
Services supplied to non-resident clients that are effectively used or enjoyed outside Australia can be treated as GST-free exports. You charge 0% GST but can still claim input tax credits on related Australian business expenses (equipment, software, accounting fees). The GST-free income must still be reported on your BAS and income tax return. Conditions: the recipient must be a non-resident who is not in Australia at the time of supply, and the service must not relate to real property in Australia or goods physically located in Australia. Most remote consulting, design, development, writing, and coaching services to overseas clients qualify. For digital platform income (SaaS subscriptions, app store sales, digital content sold to overseas consumers), the GST-free export rules can also apply where the customer is a non-resident and the supply is consumed outside Australia. Supplies to Australian consumers remain subject to GST at 10%. This distinction is valuable for nomads with a predominantly international client base: input tax credits on Australian business costs are preserved even though no GST is collected on the services.
Supplies of services to non-residents that are consumed outside Australia are GST-free. The supplier retains input tax credit entitlements on related acquisitions.(A New Tax System (GST) Act 1999 s 38-190 (exports of services))
Travel expenses: business necessity versus lifestyle choice
The ATO draws a sharp line between travel in the course of earning income and travel that is primarily a lifestyle decision. If your choice to work from Lisbon or Chiang Mai is essentially personal (your work could be done from home in Australia), general travel and living costs are private and not deductible: flights, overseas accommodation, meals, visas, local transport, and travel insurance. Travel that is deductible: trips clearly required to attend specific client meetings, conferences, or on-site work that could not be done remotely. For trips of six or more nights, a compliant travel diary is mandatory. The diary must record the nature of each activity, the location, and the time spent on business versus private activities. Nomad-style long-stay arrangements (renting an apartment in Bali for three months while working remotely) rarely allow deduction of rent or general living costs. These are treated the same as your living expenses would be in Australia: private, not business.
Travel expenses are deductible only where the travel is undertaken in the course of earning assessable income, not where it reflects a personal lifestyle choice. A travel diary is required for trips of six or more nights.(ITAA 1997 s 8-1 (general deduction); ITAA 1997 s 900-35 (travel diary requirements))
Allowable expenses in context
Business equipment is deductible regardless of where you use it, provided it earns assessable income. Laptops, portable monitors, phones, cameras, microphones, and mobile hotspots are depreciating assets over their effective life (or immediately deductible if under $300 per item, or under $20,000 for small business entities under the instant asset write-off). Software subscriptions, cloud storage, domain and hosting fees, communication costs, and coworking membership fees are generally deductible. Mixed-use items (phone, laptop) must be apportioned between private and business use. Foreign transaction fees and currency conversion costs on business payments are deductible as a cost of earning income. International payment platform fees (Wise, PayPal business fees) are deductible where related to business income. NOT deductible: flights to your next nomad destination (lifestyle, not business), overseas rent or accommodation (unless the trip itself qualifies as deductible business travel), travel insurance that covers personal activities, visa costs for personal travel, and meals while travelling (unless on a qualifying business trip with a compliant travel diary).
Support schemes
Foreign Income Tax Offset (FITO)
Eligibility: Australian tax residents who have paid foreign tax on income that is also assessable in Australia. Requires evidence of foreign tax paid (withholding certificates, foreign tax assessments). Offset limited to the Australian tax payable on the same income.
GST-free export of services
Eligibility: GST-registered businesses supplying services to non-resident clients where the service is consumed outside Australia. Client must not be in Australia at the time of supply. Service must not relate to Australian real property or goods in Australia.
Reciprocal Health Care Agreements (RHCAs)
Eligibility: Australian residents temporarily visiting a country with which Australia has an RHCA (including the United Kingdom, several European nations, and New Zealand). Coverage is limited to essential, emergency public healthcare during temporary stays.
Personal concessional super contributions (self-employed)
Eligibility: Self-employed individuals (including contractors) who are Australian tax residents. No age limit for contributions to a complying super fund. Annual concessional contributions cap: $30,000 (2025-26).
Frequently asked questions
I have been travelling for two years and have not been in Australia for more than a few weeks. Am I still a tax resident?+
Almost certainly yes, if you maintain an Australian home (owned or leased), have family in Australia, keep Australian bank accounts and super, and intend to return. The domicile test does not require physical presence. Simply travelling constantly or living in short-term rentals overseas rarely proves a permanent place of abode outside Australia. To cease residency, you generally need to establish a settled overseas base, terminate your Australian accommodation, and demonstrate a clear break from Australian ties. Until that break is clean and demonstrable, the ATO treats you as resident and taxes your worldwide income.
Do I still need to pay the Medicare levy if I spent most of the year overseas?+
Yes. The Medicare levy (2%) applies to all Australian tax residents regardless of where you physically received healthcare during the year. Spending 10 months overseas does not reduce or eliminate the levy. The Medicare Levy Surcharge (additional 1% to 1.5%) can also apply if your taxable income exceeds $101,000 (singles) or $202,000 (families) and you do not hold appropriate Australian private hospital cover, even if you were overseas for much of the year. Many higher-income nomads maintain private hospital cover specifically to avoid the surcharge.
Can I deduct my coworking space membership in Bali or Lisbon?+
Yes, coworking membership fees are generally deductible as a business expense regardless of location, provided the space is used to earn assessable income. The coworking fee is a direct cost of doing business. However, the trip to Bali or Lisbon itself (flights, accommodation, meals, visas) is not deductible if the travel is a lifestyle choice rather than a business necessity. The distinction: the coworking fee is a workspace cost (deductible), the overseas living arrangement is personal (not deductible).
What about foreign bank accounts? Do I need to report those to the ATO?+
Australian tax residents must declare all worldwide income, including interest earned on foreign bank accounts, in their Australian tax return. There is no separate foreign bank account reporting form equivalent to the US FBAR, but the ATO receives information from foreign financial institutions under the Common Reporting Standard (CRS) and will cross-match foreign account data against your return. Failing to declare foreign interest income is a common audit trigger. If foreign tax was withheld on the interest, claim a FITO offset. Keep records of all foreign account statements and withholding certificates.