For Australians, international tax is an important category. International tax generally refers to investment and other income that comes from sources outside the country. Full-time residents of Australia are subject to tax on all income, regardless of its source. Tax treaties with foreign countries eliminate the problem of double taxation. They do this by determining what level of tax is fair on which investments. They also determine what income is sourced by which countries.
International tax can seem confusing. However, the Australian Tax Office website (ATO) explains the tax system succinctly. Australians are able to determine how they’ll be taxed with help from official publications. The ATO helps people figure out their official residency status for a given tax year. This can be very significant. For example, while resident Australians are taxed on all their income, whereas temporary residents of Australia are only taxed on their earnings from Australia.
International taxation is an important source of revenue for the Australian government. While Australia is a big country, it is sparsely populated. For Australian products and companies to truly succeed, they must find larger marketplaces. Australians are also a highly educated and well-trained population, overall. There’s a demand for Australian nurses, teachers, doctors and other professionals to work short assignments overseas.
When Australians work abroad or invest their money in foreign stocks and businesses, everybody wins. Australians gain valuable money-making opportunities and sometimes acquire additional skills. Overseas companies get great skilled workers or valuable investment dollars. Fair taxation of internationally-derived income is important because it keeps these partnerships viable, and ensures that Australian institutions like schools are properly funded.
International income that may be taxed in Australia includes wages earned abroad, consultancy fees, directors fees, and other business income. International investments that may be taxed in Australia include bank interest, dividends from shares, rental income, royalties from intellectual property and pensions, including some government pensions. The ATO offers guidance on these categories on their website.
Rules around international taxation can change with time. Courses in international taxation are available for accounting professionals. They represent an important opportunity for continuing education in accounting and other tax-related fields. These courses can also be a great investment for any Australian resident who has international income.