Australian residents must declare foreign income. Worldwide income is subject to tax. You must declare all of your income, no matter what the source. Foreign income includes foreign pensions and annuities, foreign employment, foreign investment, foreign business, and capital gains on foreign assets.
Foreign income is subject to tax in the foreign country where it originated. In order to combat double taxation, there are a series of credits and exemptions – thanks to the Australian government’s tax treaties with more than 40 countries – that should help you get some of that money back.
If you are not an Australian resident, then you may not have to declare your income from non-Australian sources.
Rental income is money you earn as a result of renting your property. You must report rent and rent-related payments you receive, or become entitled to when you rent out your property. Include payments made to your agent in your income.
If the rent you receive is in the form of goods or services, work out the monetary value. Declare it on your tax return. Include the rental bond money you become entitled to retain – perhaps because a tenant defaulted or damaged your property in rental income and it must also be declared.
Capital gains result from selling an asset, including real estate, shares, and managed fund investments. You must declare all income from capital gains on your tax return. The difference between an asset’s cost basis (what you paid for it) and capital proceeds (what you received when you sold it) is a capital gain. Capital gains are distributed to you by a managed fund or another unit trust.
Do note that, though the ATO often refers to a ‘capital gains tax’ (CGT), there is no separate tax on capital gains. They are simply treated and taxed as part of your overall income.
Yes, you must declare dividends you receive on your tax return. You should receive a dividend statement indicating a number of dividends paid to you and on what date.
What are dividends?
Dividends are payments or credits made by an Australian company that you own shares in. If you received Dividend payments from investments during the year you will receive a Dividend Statement. Please enter the information required as shown on each of these statements. Do not enter income from a trust or partnership distribution at this question.
You can receive dividends from a listed investment company, a public trading trust, a corporate unit trust, or a corporate limited partnership. Dividends may be in a payment in the form of money or property, including shares.
Dividends are subject to tax under an imputation system. This means that companies pay tax on their dividends and then pass franking credits on to their shareholders along with the dividends they receive. Therefore, if you receive dividends that have been franked, you may be able to receive a franking tax offset for the tax the company has already paid on those dividends.
Learn how to claim a tax deduction on interest and dividend income here.
Firstly, you must declare the interest you receive or any credit from a source within Australia. For instance, this includes interest earned from financial institution accounts, term deposits, and interest that the ATO pays or credits to you.
Additionally, you must also declare interest from a child’s account on your return. This applies if the funds in that account belonged to you or you spent the funds as if they belonged to you.
What if I’m a foreign resident?
If you are a foreign resident, you do not need to declare interest on your tax return. When you cease to be an Australian resident, all Australian-sourced income is subject to the withholding tax provisions as a final tax. This includes interest, dividends, and royalties.
Learn more about what income you must declare on our tax blog.