Budget 2009 - Foreign employment income

Current legislation permits taxpayers who are undertaking at least 91 days continuous employment overseas to receive an exemption from paying tax on that income in Australia. Effective from 1 July 2009, this income will be taxed in Australia with a foreign tax credit available for any tax paid overseas.

Those people who plan on working overseas while remaining a resident of Australia for tax purposes (generally those who are intending on being out of the country for less than 2 years) will now pay Australian rates of tax on those foreign earnings.

Employers should ensure that they are fully utilising Living Away From Home allowances to minimise the tax impact of affected taxpayers.  These changes will not apply to aid workers, charitable workers (such as missionaries) and those working on approved overseas aid projects.

Published : 13 May 2009