Foreign income and Australian tax: what new migrants need to declare

Worldwide income, once you're a tax resident

The trigger is tax residency, not visa status or citizenship — covered in detail in a companion article in this series. From the date you become an Australian tax resident under the ATO's tests (the resides test, the domicile test, or the 183-day test), your assessable income for Australian tax purposes includes income from all sources, wherever earned, not just Australian-sourced income.

This catches things new arrivals sometimes assume are outside the system entirely: rental income from a property still owned overseas, interest on a foreign bank account, dividends from foreign shares, freelance or consulting income from clients based overseas, and pension or superannuation-equivalent payments from a previous country. None of these become invisible to the ATO just because the source is offshore and the money may never touch an Australian account.

Before you became a tax resident — for the part of the year (if any) you were a foreign resident for tax purposes — only Australian-sourced income was assessable here. The switch happens on the date residency starts, which is why getting that date right (see the residency article) matters for more than just the tax-free threshold calculation.

Why this doesn't usually mean paying tax twice

The country where the foreign income was earned very often taxes it too — that's normal and expected, not a sign of a problem. Australia doesn't ask you to pretend that foreign tax wasn't paid; instead, two mechanisms work together to prevent the same income being taxed twice in full: double-tax agreements (DTAs) and the foreign income tax offset (FITO).

A DTA is a treaty between Australia and another country that allocates taxing rights between the two — broadly, deciding which country gets first claim on a particular type of income, and setting out relief mechanisms for the other. Australia has DTAs with more than 40 countries, covering most of the countries new migrants commonly arrive from, though not every country in the world has one with Australia, and the specific terms genuinely differ treaty by treaty.

Where a DTA doesn't fully eliminate the double taxation itself, the foreign income tax offset steps in: it's a credit against your Australian tax liability equal to (broadly) the foreign tax you already paid on that same income, up to certain limits. The combined effect of the two mechanisms is that legitimately-taxed foreign income is very rarely taxed twice in full — but working out exactly how much offset applies, and whether a specific treaty changes the analysis, is genuinely technical and not something to estimate by hand.

What you actually need to do about it

Declare the foreign income on your Australian return regardless of whether it was already taxed overseas — the declaration and the offset are two separate steps, not one. Convert foreign amounts to Australian dollars using the ATO's specified method (generally an average exchange rate for the year, or the rate on the date of the transaction, depending on the income type).

Keep evidence of foreign tax actually paid — this is what substantiates a foreign income tax offset claim. A statement from the foreign tax authority, foreign tax return, or withholding statement is the kind of record that matters here; without it, claiming the offset becomes difficult even where you clearly did pay tax overseas.

Don't assume a DTA means you don't need to declare the income at all — treaties allocate taxing rights and provide relief mechanisms, they very rarely mean one country simply ignores income the other country has already seen. The declaration obligation and the relief mechanism are both real and both matter.

Common foreign income situations for new migrants

A rental property kept in your previous country while you settle in Australia is a frequent one — the rental income (net of allowable expenses under Australian rules, which may differ from the rules in the property's own country) is assessable here once you're a tax resident, with foreign tax already paid on it eligible for the offset.

A pension or retirement payment from a previous country's system is another — how these are treated varies significantly depending on the specific DTA and the type of pension, and is genuinely one of the more technical areas, worth a specific conversation with a tax agent experienced in cross-border situations rather than a general assumption.

Continuing freelance or remote work for overseas clients after you've become an Australian tax resident is increasingly common and is treated as assessable Australian income (from a worldwide-income perspective) even though the clients and payment method are entirely offshore.

Selling an asset you owned before moving to Australia — a property, shares — can also trigger Australian tax consequences depending on timing and the specific asset, a separate and more complex question (capital gains tax) than ordinary income declaration.

This is genuinely specialist territory

Of everything covered across this series of articles, foreign income and cross-border tax treatment is the area where the gap between 'general information' and 'advice tailored to your actual numbers' matters most. The right answer depends on your specific country of origin, the specific type of income, the specific DTA terms (where one exists), and precise dates — all of which genuinely change the outcome, sometimes substantially.

A registered tax agent — ideally one with experience handling cross-border and new-migrant returns specifically, which many do, given how common this situation is — can work through your actual figures and confirm what's owed, what offset applies, and whether anything about your situation (a particular treaty provision, a specific income type) changes the standard analysis.

This is squarely a tax question, not a migration question — a MARA-registered migration agent advises on your visa pathway, not on how a specific country's DTA with Australia treats your rental income. Migratio matches you with the migration side for free; the tax side belongs with a registered tax agent.

Do I have to declare income I earn overseas after moving to Australia?

Yes, generally — once you're an Australian tax resident, your worldwide income is assessable here, not just income earned in Australia. This includes rental income, interest, dividends, freelance income, and pensions from other countries.

Will I be taxed twice on the same foreign income?

Usually not in full. Double-tax agreements between Australia and many countries allocate taxing rights, and the foreign income tax offset credits Australian tax you owe with foreign tax you've already paid on the same income. You still need to declare the income and actively claim the offset — it isn't automatic.

Does Australia have a double-tax agreement with every country?

No — Australia has DTAs with more than 40 countries, covering most common countries of origin for migrants, but not every country. Where no DTA exists, the foreign income tax offset can still apply based on foreign tax actually paid, though the analysis differs.

What records do I need for foreign income earned before I was an Australian tax resident?

Income earned before your Australian tax residency started generally isn't assessable here at all — only income from your residency start date onward is in scope. Getting your residency start date right (see the tax residency article) determines exactly where that line falls.

Should I ask a migration agent about my foreign income tax?

No — this is a tax question, not a migration one. A registered tax agent, ideally one experienced with cross-border returns, is the right person. Migratio matches you with a MARA-registered migration agent for visa questions, free.

Is this specific advice for my country and income type?

No. DTA terms and offset calculations are genuinely specific to your country and income type. This is general information only — a registered tax agent should confirm your actual position.