Non-Resident & Foreign Income Tax Calculator

How Non-Resident Tax Works in Australia

Your tax obligations in Australia depend on your residency status for tax purposes, which is different from your visa or citizenship status.

Foreign Residents

If the ATO classifies you as a foreign resident, you only pay tax on Australian-sourced income. There is no tax-free threshold — you pay 30% from the first dollar, with higher rates kicking in above $135,000. The advantage is you don't pay the 2% Medicare levy.

Temporary Residents

Temporary residents on valid temporary visas are generally taxed as Australian residents (with the tax-free threshold and Medicare levy), but with a significant benefit: most foreign passive income is exempt. This includes overseas dividends, interest, rental income, and capital gains on non-Australian assets. However, foreign employment income (salary for services performed overseas) is still taxable.

Residents with Foreign Income

If you're an Australian resident for tax purposes, you're taxed on your worldwide income. To avoid double taxation, you can claim a Foreign Income Tax Offset (FITO) for tax paid to another country. The offset is limited to the Australian tax attributable to that foreign income.

Foreign Resident Tax Rates 2025-26

• $0 – $135,000: 30%
• $135,001 – $190,000: 37%
• $190,001+: 45%

These rates apply from 1 July 2024 following the Stage 3 tax cut alignment. Foreign residents do not pay the 2% Medicare levy.

Comparison: Foreign Resident vs Australian Resident Rates

At low to moderate incomes, foreign residents pay significantly more tax. For example, on $80,000:

• Foreign resident: $24,000 (30% flat, no Medicare) = 30.0% effective rate
• Australian resident: $14,788 income tax + $1,600 Medicare = $16,388 = 20.5% effective rate
• Difference: Foreign resident pays $7,612 more per year

The gap narrows at higher incomes. Above approximately $250,000, the lack of Medicare levy starts to partially offset the loss of the tax-free threshold.

Foreign Income Tax Offset (FITO)

If you're an Australian resident who has paid tax on foreign income in another country, you can claim a FITO to reduce your Australian tax:

• $1,000 or less: Claim the actual amount of foreign tax paid — no limit calculation needed
• Over $1,000: The offset is the lesser of the foreign tax paid and the offset limit

The offset limit is calculated as: tax on total income minus tax on total income excluding foreign income. This ensures the offset doesn't exceed the Australian tax attributable to the foreign income.

FITO is non-refundable — it can reduce your tax to zero but cannot generate a refund. Excess credits cannot be carried forward to future years.

Temporary Resident Exemptions

If you hold a temporary visa and have never been a permanent resident, most foreign passive income is exempt:

• Exempt: Foreign dividends, foreign interest, foreign rental income, capital gains on non-Australian assets
• Taxable: Australian-sourced income, foreign employment income (salary/wages)
• CGT: Only applies to taxable Australian property (real estate, mining rights, business assets)

This exemption makes Australia attractive for temporary workers with significant overseas investment portfolios — they can earn foreign investment income tax-free while working in Australia.

Frequently Asked Questions