Digital nomads and taxes
Are you an Australian tax resident according to the ATO working overseas as a digital nomad? If so, you need to be aware of your tax obligations before you leave Australia and while you're abroad. In this blog post, we'll highlight the key points about the residency tax in Australia and what taxes you may be liable for when working overseas for the majority of the year. We'll also explain the pros and cons of working as a digital nomad in beautiful locations like Indonesia, Malaysia, or Thailand.
As an Australian resident for tax purposes, you pay tax on your worldwide income, even if you pay tax in the country where you earn the income. This includes any income from providing a foreign service in a foreign country. You must declare all your foreign employment income and any exempt income in your Australian tax return. You may be able to claim a foreign income tax offset if you paid tax on your foreign income in another country(This will depend on double taxation agreements).
You also need to repay any study and training support loans, such as HELP or VET Student Loan, while you're overseas. You'll need to update your contact details and submit an overseas travel notification before leaving Australia or within seven days of leaving. You'll also need to advise the ATO of your worldwide income, make compulsory repayments, or pay an overseas levy towards your debt if you earn over the minimum repayment threshold.
If you leave your home in Australia temporarily and rent it out, you can continue to treat it as your main residence for up to six years for capital gains tax (CGT) purposes, but you will need to complete a tax return and declare the rental income less deductible expenses. If you don't rent out your vacated home, you can treat it as your main residence for an unlimited period. However, if you cease to be an Australian resident and decide to sell your home in Australia, you may be liable to pay CGT.
Working as a digital nomad in exotic locations can have many benefits, such as lower living costs, cultural diversity, flexible lifestyle, and opportunities to network with other remote workers. However, there are also some challenges, such as visa requirements, internet reliability, time zone differences, language barriers, and cultural adjustment. You'll need to do your research and plan ahead before you embark on your digital nomad journey.
To find out more about your tax situation as an Australian resident working overseas, visit the ATO website or contact us today!