Temporary residents in Australia: tax issues you need to know

— 8 min read

Australia is a popular destination with expat medical practitioners chasing the sun, sea and a lifestyle change.

Getting their head around the Australian tax system can be a daunting task for new migrants, especially those who are only here for a short period.

Here are some of the things to be aware of when you’re working in Australia under visa rules.

Your immigration status

An individual’s immigration status will be one of the key determinants of tax residency. Most overseas medical practitioners will enter and work in the country via a temporary worker visa, such as the newly introduced Temporary Skill Shortage Visa (TSS) or its predecessor the Temporary Work (Skilled) Visa (Subclass 457).

If under the terms of the visa they can only remain and work for a finite period, they are typically deemed to be temporary residents for Australian tax purposes. Changing immigration status such as applying for a Permanent Residency visa, will have implications for tax residency. For further information from the Australian Tax Office on this matter click here.

Assessment of income

Temporary tax residents only need to declare income derived within Australia including (but not limited to):

  • Salary & Wages from employment in Australia
  • Business income using an Australian Business Number (ABN). E.g. locum or private consulting income earned while operating as a sole-trader
  • Rent from investment properties in Australia
  • Interest from Australian savings accounts
  • Dividends from shares held within Australia
  • Foreign employment income earned during temporary residency

Only permanent tax residents are assessed on their ‘worldwide’ income and thus need to also include income derived overseas.

Capital gains assessment

The Australian tax system assesses capital gains made from the disposal or transfer of assets. There are exemptions and concessions in certain cases; such as your main residence and assets held for 12 months or more.

Any overseas assets held by temporary residents will not normally be considered. However, becoming a permanent resident will have implications on your overseas-held assets and capital gains tax assessment in Australia.

Medicare and health insurance

Citizens of countries that have reciprocal health care agreements with Australia have access to the public health system and are entitled to Medicare benefits. In turn they are liable for the Medicare Levy and Medicare Levy Surcharge taxes as part of their annual income tax assessment.

It is important to check whether any health insurance that you have as part of your visa requirements is appropriate to avoid the ‘Medicare Levy Surcharge’. This is an additional tax that affects higher income earners who do not have a base level of private health insurance cover. For further information on private health requirements for overseas visitors click here.

Citizens of countries without a reciprocal health care agreement can apply for a ‘Medicare Entitlement Statement’ and be exempt from Medicare Levy assessment for any period during which they were not entitled to Medicare benefits.

However, keep in mind that there is no one size fits all and that circumstances may vary depending on your personal situation.

The Tax Consultants at DPM can help with queries regarding your tax compliance needs.

To find out more, get in touch on 1800 376 376 or book a free no-obligation initial consultation.

* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.

Authors

Dino Miliotis

B. Comm, Grad Dip Com, CPA

Consultant
Melbourne

Connect on LinkedIn

Dino is a Certified Practising Accountant who joined DPM in 2009. He looks after clients across a number of lifecycle stages, from graduates to newly established consultants. He advises on salary packaging and taxation compliance, and assists with overall planning and wealth creation.