Non-Resident Tax Rates Australia 2025-26

What Is Non-Resident Tax in Australia?

Non-resident tax is a separate set of Australian income tax rates that apply to individuals classified as foreign residents for tax purposes by the ATO.

Foreign residents pay tax from their very first dollar of Australian-sourced income. The tax-free threshold of $18,200 does not apply, and non-residents cannot claim the "Low Income Tax Offset" (LITO) worth up to $700. The lowest marginal rate for non-residents is 30%, compared to 0% for residents earning below $18,200 and 16% for residents earning between $18,201 and $45,000. Non-residents also cannot access the "Senior Australians and Pensioners Tax Offset" (SAPTO), the "Zone Tax Offset", or the Medicare levy exemption benefit that residents receive.

Non-resident taxation applies only to Australian-sourced income, including salary and wages earned in Australia, rental income from Australian property, and dividends from Australian companies. Foreign-sourced income (for example, rental income from a property in the United Kingdom, interest earned in a Singapore bank account, or salary paid by an overseas employer for work performed outside Australia) is not assessable in Australia for non-residents. Use the Income Tax Calculator with the non-resident toggle to calculate your exact after-tax income.

What Are the Non-Resident Tax Brackets for FY2025-26?

Non-residents pay 30% on every dollar up to $135,000, with no tax-free threshold and no lower-rate bands.

The table below shows the 3 non-resident income tax brackets for the 2025-26 financial year. Resident brackets are included for comparison. Non-residents face significantly higher taxation at all income levels below $135,000 because residents benefit from the $0 tax-free threshold and the 16% marginal rate on income between $18,201 and $45,000.

Non-Resident Tax Rate Table

Resident Tax Rate Table (for Comparison)

Non-resident brackets and resident income tax brackets converge at the $135,001 threshold. Above $135,000, both groups pay the same marginal rates of 37% and 45%, though cumulative tax payable remains higher for non-residents due to the flat 30% applied to the first $135,000.

How Does the ATO Determine Tax Residency?

The ATO determines your tax residency using 4 statutory tests, and you are an Australian resident for tax purposes if you satisfy any one of them.

Tax residency is different from visa status or citizenship. A person on a temporary visa can be a tax resident, and an Australian citizen living overseas can be a non-resident. The ATO examines your personal circumstances, economic connections, and behaviour patterns to determine where you "reside" in the ordinary sense of the word.

The Four Residency Tests

1. Resides test: The primary test. You reside in Australia if Australia is your usual place of abode. The ATO considers factors including the physical presence of your family, your dwelling arrangements, the location of your personal property, and your social and economic ties. A person who maintains a home in Sydney, has children enrolled in school in Melbourne, or holds an ongoing employment contract in Brisbane generally satisfies this test.
2. Domicile test: Your domicile is your permanent home by law (typically inherited from your parents). If your domicile is in Australia, you are a resident unless the ATO is satisfied that your "permanent place of abode" is outside Australia. Relocating to London, Tokyo, or Dubai for an indefinite period with no firm intention to return typically satisfies the permanent-place-of-abode exception.
3. 183-day test: If you are physically present in Australia for 183 days or more (continuous or broken) during the income year, you are a resident unless you can show your usual place of abode is overseas and you have no intention of taking up residence. This test most commonly captures long-stay business travellers, extended-holiday visitors, and individuals on transitional visa arrangements.
4. Superannuation test: Commonwealth government employees posted overseas are treated as residents regardless of their physical location. This covers diplomats, ADF members, and APS officers stationed in embassies, consulates, or military bases in countries including the United States, United Kingdom, and Japan.

The ATO applies these tests hierarchically. The resides test is considered first. If it provides a clear answer, the remaining 3 tests are not required. Individuals uncertain about their residency status can request a private ruling from the ATO at no cost, which provides a binding determination for the relevant financial year.

Do Non-Residents Pay the Medicare Levy?

Non-residents are fully exempt from the 2% Medicare levy and the "Medicare Levy Surcharge" (MLS) of up to 1.5%.

The Medicare levy funds Australia's public health system, and non-residents cannot access Medicare services. This exemption saves a non-resident earning $100,000 a total of $2,000 per year compared to a resident without private health insurance. However, the exemption does not offset the higher income tax rates: a non-resident earning $100,000 pays $30,000 in income tax versus approximately $24,067 for a resident (including Medicare levy), a net disadvantage of $5,933.

Non-residents working in Australia need private health insurance or must pay for medical services out of pocket. Australia has "Reciprocal Health Care Agreements" (RHCAs) with 11 countries including the United Kingdom, Ireland, New Zealand, Sweden, the Netherlands, Finland, Belgium, Norway, Slovenia, Italy, and Malta. Citizens of these countries receive limited Medicare access for essential treatment during temporary stays.

How Does Non-Resident Tax Compare to Resident Tax?

A non-resident earning $80,000 pays approximately $12,467 more in income tax than an Australian resident at the same salary.

The comparison table below calculates exact tax payable at 5 common salary levels for the 2025-26 financial year. Resident tax includes the LITO offset but excludes the Medicare levy to isolate the income tax difference. The "Extra Cost" column shows how much additional taxation a non-resident faces compared to a resident at each income level.

Worked Example: $90,000 Salary

Consider an IT contractor earning $90,000 per year in Melbourne. The tax calculation differs significantly based on residency status:

The non-resident in this example takes home $7,737 less per year, or $644 less per month, than the resident. Both employees receive superannuation at 12% ($10,800) on top of their gross salary. Use the Income Tax Calculator to run your own comparison at any salary level.

What Tax Benefits Do Non-Residents Lose?

Non-residents lose access to 6 major tax concessions that reduce the tax burden for Australian residents.

• No tax-free threshold ($18,200) — tax applies from the first dollar of income, costing up to $2,912 in additional tax at the 16% marginal rate
• No Low Income Tax Offset — residents earning below $66,667 receive up to $700 in LITO, reducing their effective tax rate. See the Low Income Tax Offset guide for full phase-out details
• No Senior Australians and Pensioners Tax Offset — SAPTO provides up to $2,230 for eligible seniors, creating an effective tax-free threshold of $33,532 for single pensioners
• No Zone Tax Offset — residents living in remote or isolated areas (Zone A, Zone B, or special areas) receive offsets ranging from $338 to $1,173 per year. See the Zone Tax Offset guide for eligible locations
• No Medicare levy exemption — while non-residents do not pay the 2% levy, they also cannot access bulk-billed GP visits, public hospital treatment, or subsidised prescriptions under the PBS
• No CGT main residence exemption — non-residents pay capital gains tax on the sale of Australian property with no 50% CGT discount and no main residence exemption, even if the property was their home while they were a resident

Non-residents retain the ability to claim work-related deductions, salary sacrifice into superannuation (subject to concessional contribution caps of $30,000), and claim deductions for self-education expenses, union fees, and work-related travel.

What About Working Holiday Makers on Subclass 417/462 Visas?

Working holiday makers pay a flat 15% tax rate on the first $45,000 of income, a concessional rate that sits between the resident and standard non-resident rates.

Subclass 417 (Working Holiday) and subclass 462 (Work and Holiday) visa holders are classified as "working holiday makers" (WHMs) under a separate taxation schedule. WHMs are not subject to standard non-resident rates, provided their employer registers as an employer of working holiday makers with the ATO. Unregistered employers must withhold at the non-resident rate of 30% from the first dollar.

WHMs who earn $40,000 pay $6,000 in tax under the WHM schedule, compared to $12,000 under non-resident rates and $3,488 under resident rates. Read the full Working Holiday Maker Tax Rate guide for details on employer registration, DASP claims, and departure tax returns.

How Do Double Tax Agreements Affect Non-Residents?

Australia has 46 bilateral Double Tax Agreements (DTAs) that prevent the same income from being taxed in both Australia and the individual's home country.

DTAs allocate taxing rights between countries based on the type of income. Employment income is generally taxed in the country where the work is performed. Dividends, interest, and royalties have reduced withholding rates under most DTAs. A non-resident receiving dividends from an Australian company typically faces a withholding rate of 15% under most DTAs, reduced from the standard 30% domestic rate.

Key DTA partner countries include the United States, United Kingdom, Canada, Germany, Japan, Singapore, India, China, New Zealand, and South Korea. Each agreement contains specific provisions for different income types, so the applicable rate depends on both the income category and the treaty country.

Non-residents can claim a "Foreign Income Tax Offset" (FITO) in their home country for Australian tax paid, or claim an offset in Australia for tax paid overseas, depending on the DTA terms. This prevents double taxation on income such as Australian rental income earned by a UK-based property investor or Australian employment income earned by a US national on temporary assignment. The ATO publishes a complete list of DTAs on its website with country-specific withholding rates for dividends, interest, and royalties.

How Do Non-Residents Lodge a Tax Return?

Non-residents lodge an Australian tax return through myTax (the ATO's online portal) or through a registered tax agent, with the same 31 October deadline as residents.

The lodgement process follows 6 steps:

1. Obtain a Tax File Number (TFN) — apply online through the ATO or at an Australian post office. Without a TFN, your employer withholds at the maximum rate of 45% plus the 2% Medicare levy
2. Collect your income statements — your employer provides an income statement (previously called a payment summary or group certificate) through Single Touch Payroll by 14 July each year
3. Log in to myTax — access myTax through your myGov account. Non-residents outside Australia can use myTax without an Australian phone number
4. Select "non-resident" — when completing the return, select your residency status for each period. The system applies non-resident tax rates automatically
5. Claim deductions — enter work-related deductions including uniforms, tools, travel, and self-education. Non-residents claim the same deductions as residents
6. Submit and track — the ATO processes most electronic returns within 2 weeks. Refunds are paid to an Australian bank account or a nominated overseas account

Non-residents who have left Australia permanently should lodge a "departure tax return" covering the period from 1 July to their departure date. This return uses the non-resident rates for the non-resident portion and can be lodged from overseas through myTax. Using a registered tax agent extends the lodgement deadline to 15 May of the following year for most taxpayers.

What Changed for Non-Residents in FY2025-26?

The FY2025-26 non-resident tax brackets reflect the Stage 3 tax cuts that restructured resident brackets, while the non-resident rate structure remained at 30% flat up to $135,000.

The Stage 3 tax cuts (effective 1 July 2024) changed resident brackets significantly: the 19% bracket was replaced with a 16% rate, and the 32.5% bracket dropped to 30%. Non-resident rates were adjusted in parallel — the previous 32.5% rate on income from $0 to $120,000 became 30% on income from $0 to $135,000. The net effect is that non-residents earning up to $135,000 received a small tax reduction, but residents received a proportionally larger benefit.

The superannuation guarantee rate also increased to 12% (from 11.5% in FY2024-25), applying equally to residents and non-residents. Employers must pay the SG rate on top of gross salary for all employees, regardless of tax residency status. Check the Superannuation Calculator to see how this affects your total remuneration package.

Related Resources

These Australian tax calculators and guides cover topics closely related to non-resident taxation for the 2025-26 financial year.

• Income Tax Calculator — calculate your take-home pay as a resident or non-resident with the residency toggle
• Working Holiday Maker Tax Rate guide — 15% flat rate details for subclass 417 and 462 visa holders
• Tax Brackets guide — complete FY2025-26 income tax bracket tables for residents
• Superannuation Calculator — calculate employer SG contributions at the 12% rate
• Salary Sacrifice guide — pre-tax contribution strategies available to both residents and non-residents
• Low Income Tax Offset guide — LITO details (residents only, up to $700)

Frequently Asked Questions