What Income Is Taxable For A Non-Resident Australian Citizen?

What Income Is Taxable For A Non-Resident Australian Citizen?

To begin with, a non-resident in Australia is taxed on an income that is sourced in Australia. The marginal tax rates which apply to a non-resident in Australia are somewhat different. As a non-resident in Australia, you may be incurred by only certain taxes in Australia. Say, for instance, a lump sum final withholding tax might incur on a particular income that you have earned. This withholding tax will clarify the fact that from now on you need not lodge an Australian tax return pertaining to this kind of income.

Incomes that are taxable for non-residents in Australia

So, you are a non-resident citizen residing in Australia, right? Then, rest assured that you are exclusive of the various tax purposes to be fulfilled in Australia. As a non-resident, you only need to lodge your non-resident tax return on the income that is sourced in Australia. So, as a non-resident in Australia, there are certain types of income on which you need to pay taxes.  These include the following:

  1. Shares-Exemptible in Australia.
  2. Property-Taxed in accordance with the non-resident tax rates of Australia.
  3. Unfranked dividends-This form of income is incurred by either a withholding tax of thirty or 15%. This amount is often regarded as your final tax. 
  4. Franked dividend income-Considered exemptible in a country like Australia. 
  5. Interest income- This particular mode of income is incurred by a withholding tax of 10% which is regarded as the final tax as well.
  6. Business income-This particular mode of income is levied by taxes according to the pertinent non-resident tax rates of Australia.
  7. Rental property income-Just like business income, rental property income is also taxed according to the pertinent non-resident tax rates of Australia. 
  8. Wages income-Wage income for non-residents in Australia is again taxed according to the relevant non-resident tax rates of the country. 

Several non-residents residing in Australia are taxed at a rate of 33%. This rate is levied upon the first 80, 000 of their income which is considered taxable in Australia. Subsequently, a tax rate of 37% is levied when the income reaches a certain threshold. The income included in this threshold has to vary between a sum of AU$80,001 and AU$180,000. When this amount turns to a figure of AU$180,001, then, it is taxed at a rate of 45%. 

Benefits for non-resident citizens in Australia

There are certain advantages that you can expect while lodging your income tax return in Australia. So, to get started, you need not pay the Medicare taxes levied upon residents of Australia generally. Aside, as a non-resident citizen of Australia, you can also access 10% of any possible interest earned from the bank accounts of Australia. The pertinent percentage of 10% is again withheld to be incurred by potential taxes. The interest specified is again excluded from your assessable income.  

Additional information

However, you need to provide an offshore address to your bank. Failure to meet this requirement can again lead to the withholding of your tax by your pertinent financial institution at a much greater tax rate than what you can expect. 

Income from Capital Gains

Certain Australian assets are considered taxable in Australia. So, as a non-resident in Australia, do you also hold any of these assets? If you sell any of them and find that the selling price is more than what you had paid, it means you have made a capital gain. A capital gain made on any asset is taxable in Australia. All these assets which are subject to Capital Gains Tax are known as a ‘taxable Australian property’. 

The pro-rata CGT discount

Non-residents of Australia are inaccessible to the CGT discount of 50% from May 8 2012. However, the good news is that they can claim a pro CGT discount of 50%. This privilege applies only to those who have purchased a CGT asset prior to 8th May 2012. 

Main Residence Exemption

As a non-resident citizen of Australia, you can now also claim the main residence exemption. However, you need to make sure that you had sold your home after 30th June 2020. Another criterion is that you should fall under the ‘life events’ exception so as to access the main residence exemption.  According to this requirement, you should be a non-resident in Australia continuously for a time-frame of six years or less. During that period any of the following events must have taken place including: 

  • An abrupt situation of divorce while it was a verdict of an unexpected split of family law.
  • The sudden demise of the spouse or minor child of the individual.
  • The individual, his or her minor child or spouse being inflicted by a terminal disease.

To enquire whether or not you are eligible for these privileges, it’s always advisable to seek the assistance of a pro. A professional tax accountant in Perth can definitely provide you with the best guidance in this matter. 

Income Tax rates for non-residents in Australia 

Unlike a resident taxpayer, a non-resident in Australia is subject to different tax rates in Australia. These include the following:

  • If the taxable income is AU$180,001 or more-A tax of AU$61,200 with 45 cents for each one AUD exceeding AU$180,000
  • If the taxable income is between AU$12,001 and AU$180,000-A tax of AU$39,000 is generally levied with 37 cents for each one AUD exceeding AU$120,000 and
  • If the taxable income is between 0 and AU$120,000-A tax of 32.5 cents for each one Australian dollar is levied. 

Make sure that you pay your potential taxes to the Australian Taxation Office on time and within the due date. In this regard, you can avail of top-notch tax return services in Perth to calculate your taxes effectively. 

Simple Tax Calculator

Alternatively, you can also use the simple tax calculator available on the official site of the Australian Taxation Office. By using this tool, you will be able your lodge tax return against the right income taxes levied on your taxable income. Contact a qualified tax agent in Perth to complete the same task more efficiently and quickly.
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