Individual - Other issues

Last reviewed - 27 June 2024

Tax equalisation

A tax equalisation plan ensures that an employee's total tax burden will remain the same as in the home country. If the tax in the overseas country is greater than that which would have been incurred in the home country (usually referred to as the 'hypothetical tax liability'), the employer reimburses the excess. If the tax in the overseas country is less than the hypothetical tax liability, the employer retains the benefit.

This plan requires the calculation of the employee's hypothetical home country tax. The hypothetical tax is generally calculated on a base salary and other base remuneration, as in the home country.

Residential property vacancy fee for foreign persons

A property vacancy fee and annual reporting is applied to certain foreign owners of Australian residential property who submit a Foreign Investment Review Board (FIRB) notice or application (or would be so required had an exemption not applied) to acquire a residential dwelling or residential land at any time from 7:30 pm AEST on 9 May 2017. An individual who is not ‘ordinarily resident’ in Australia (with certain exceptions, such as Australian citizens), including a holder of a visa that permits the individual to remain in Australia for only a limited period, is subject to these rules.

In summary:

  • the foreign owner of Australian residential real estate with a dwelling is required to give the Commissioner of Taxation an annual ‘vacancy fee return’, within 30 days after the end of a ‘vacancy year’, even if there is no liability to a vacancy fee, and
  • a vacancy fee is imposed on the foreign owner where the property is not residentially occupied in the specified manner (i.e. occupied as the residence of the owner [or their relatives] or genuinely occupied, or available for occupation [at a market rent], as a residence under lease or licence with a term of 30 days or more) for at least 183 days in the ‘vacancy year’, or in cases where the annual vacancy fee return is not lodged.

The relevant ‘vacancy year’ is broadly based on the first and each successive 12-month period commencing from the owner’s initial right to occupy the dwelling.