If I work overseas, how is my foreign income taxed as an Australian resident?

If you remain an Australian resident for tax purposes, your worldwide income is assessable in Australia regardless of where it is earned. This includes salary from a foreign employer, business income, and investment income from overseas. You must include all foreign income on your Australian tax return, converted to Australian dollars at the exchange rate on the date received (or the annual average rate for regular income).

To prevent double taxation, Australia has double tax agreements (DTAs) with many countries. If you paid foreign tax on your overseas income, you can claim a foreign income tax offset (FITO) in Australia. The FITO reduces your Australian tax liability by the amount of foreign tax paid, dollar for dollar, up to the amount of Australian tax payable on that foreign income. You cannot get a refund from the FITO; it only offsets tax, not creates a surplus.

Your residency status is the key question. If you move overseas permanently and cease to be an Australian resident, only income sourced in Australia remains taxable here. The residency test considers where your domicile is, how long you have been overseas, your intentions, and the location of your family and assets. The ATO scrutinises residency claims carefully. If you spend most of the year offshore but maintain strong Australian ties (home, family, bank accounts), you will likely remain an Australian resident.