Non-Resident Tax Basics in Australia (2025-26)
Last reviewed:
Primary tax-year context: 2025-26
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. Speak with a registered tax agent for advice.
If you are a foreign resident for Australian tax purposes, the rules are meaningfully different from those that apply to residents. There is no tax-free threshold, different marginal rates apply, and you have no access to most tax offsets. This guide covers the key settings for 2025-26.
Tax residency vs visa status
The most important point first: tax residency is not the same as visa status. You can hold a temporary visa and be a tax resident. You can hold permanent residency and be a tax non-resident. Visa class is one input; it does not determine your tax residency on its own.
The ATO uses four tests to determine residency:
- Domicile test: if your domicile is in Australia and your permanent place of abode is not overseas, you are a resident.
- 183-day test: if you are in Australia for 183 days or more in a income year and do not have a usual place of abode outside Australia, you are a resident.
- Superannuation test: applies to Commonwealth Government employees and their spouses.
- Commonwealth superannuation fund test: applies to certain members of Commonwealth superannuation schemes.
If none of the four tests makes you a resident, you are a foreign resident for tax purposes for that income year. Mixed-year situations (arriving or departing mid-year) require apportionment.
Foreign resident tax rates for 2025-26
Foreign residents pay no tax on the first dollar — there is no tax-free threshold — and face a higher starting rate:
| Taxable income | Marginal rate |
|---|---|
| $0 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Compare this to the resident rates:
| Taxable income | Resident rate | Foreign resident rate |
|---|---|---|
| $0 – $18,200 | 0% | 30% |
| $18,201 – $45,000 | 16% | 30% |
| $45,001 – $135,000 | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% |
| $190,001+ | 45% | 45% |
The difference is entirely at the lower end. Above $45,000 the marginal rates align. The large divergence is the absence of the tax-free threshold and the 16% bracket.
No Medicare levy
Foreign residents do not pay the Medicare levy (2% for most residents). However, this is not a windfall — foreign residents have no access to Medicare-funded healthcare.
No tax offsets
Foreign residents cannot access the following offsets that reduce a resident’s tax bill:
- Low Income Tax Offset (LITO): up to $700 for residents on lower incomes
- Low and Middle Income Tax Offset (LMITO): no longer available after 2022-23, but was resident-only
- Senior Australians and Pensioners Tax Offset (SAPTO): resident-only
The absence of LITO in particular means the effective tax rate for foreign residents on lower incomes is substantially higher than the headline marginal rates suggest.
Resident vs non-resident: worked comparison
The following uses income tax only (no Medicare, no offsets other than LITO for resident):
| Taxable income | Resident tax (approx) | Non-resident tax | Difference |
|---|---|---|---|
| $80,000 | ~$17,147 | ~$24,000 | ~$6,853 |
| $120,000 | ~$31,667 | ~$36,000 | ~$4,333 |
| $200,000 | ~$56,142 | ~$62,050 | ~$5,908 |
At $80,000 a non-resident pays roughly $6,800 more per year in income tax than an equivalent resident. At higher incomes the gap narrows proportionally because more income falls in the brackets where rates are the same.
What income is taxable in Australia
Foreign residents are only taxed on Australian-sourced income. This includes:
- Salary and wages earned while working in Australia
- Australian rental income
- Interest and dividends from Australian sources (often subject to withholding tax rather than inclusion in a tax return)
- Capital gains on taxable Australian property (see below)
Foreign-sourced income is generally not included in an Australian tax return for foreign residents.
Capital gains tax for foreign residents
Foreign residents pay CGT only on taxable Australian property (TAP). This includes:
- Direct interests in Australian real property (land, buildings)
- Indirect interests in Australian real property (certain shares where more than 50% of asset value is Australian real property)
- Assets used in an Australian business through a permanent establishment
- Mining, quarrying, or prospecting rights in Australia
The standard 50% CGT discount is not available to foreign residents on assets acquired after 8 May 2012. Assets acquired before that date may have a partial discount depending on the holding period.
Working Holiday Maker rates
Working Holiday Makers (WHMs) on subclass 417 or 462 visas are a separate category. They are non-residents for tax purposes but face a different rate structure:
| Taxable income | WHM rate |
|---|---|
| $0 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Note the 15% starting rate — significantly lower than the standard 30% for other foreign residents, but still higher than the 0% threshold a resident enjoys. WHMs also cannot access the tax-free threshold or most offsets.
Withholding tax on investment income
For foreign residents, certain investment income streams are handled via withholding tax rather than inclusion in a tax return:
- Dividends: typically 30% withholding, reduced to 15% under most tax treaties if the dividend is unfranked. Franking credits offset the withholding in some circumstances.
- Interest: 10% withholding in most cases.
- Royalties: 30% withholding, reduced by treaty in many cases.
If withholding has been applied at the correct rate, the income is generally not required to be included in an Australian tax return.
Practical considerations
- Confirm your residency status before lodging — the ATO’s online residency decision tool can help, but complex situations warrant professional advice.
- Notify your employer — if you become or cease to be a foreign resident mid-year, your employer’s withholding must change immediately.
- Tax treaties — Australia has tax treaties with over 40 countries that can modify rates for specific income types. Check whether a treaty applies to your situation.
- Super — if you have an Australian superannuation account from past employment, Departing Australia Superannuation Payment (DASP) rules allow you to claim it when you leave permanently.