Australia

Foreign tax relief

Australian-resident individuals (who are not temporary residents) are subject to Australian tax on their worldwide income, with a foreign income tax offset (FITO) allowed for most foreign income taxes paid to the extent of Australian tax payable on foreign sourced and foreign taxed amounts. Such offsets are, subject to some additional restrictions, also available to non-residents.

Tax treaties

Australia has tax treaties with many countries throughout the world. Under the treaties some forms of income are exempt from tax or qualify for reduced rates. These include royalties, dividends, and capital gains.

Below is a list of countries with which Australia currently has a tax treaty:

* Limited to allocation of taxing rights in respect of certain income derived by specified individuals, such as retirees, government employees, and students.

The Australian government plans to enter into new and updated tax treaties in the coming years. A new treaty with Portugal was signed on 30 November 2023 (yet to enter into force) and a new treaty with Slovenia was signed on 9 September 2024 (yet to enter into force). Australia is also working towards negotiating its first tax treaties with Ukraine and Brazil, and will update its treaties with New Zealand, the Republic of Korea, and Sweden.

Australia has also entered into bilateral agreements with a number of countries in relation to the exchange of information in relation to taxes.

Australia has enacted the Organisation for Economic Co-operation and Development (OECD) Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI has been ratified, which means that it applies to ‘covered countries’, such as Belgium, Canada, France, India, Indonesia, Ireland, Japan, Korea, New Zealand, Singapore, and the United Kingdom.