Normally, Australian residents will pay Australian tax on their worldwide income but non-residents will only pay Australian tax on income with an Australian source.
An exception to the general rule is temporary residents, including most of those on 457 visas (a 457 visa allows non-residents to work in Australia for up to four years). Executives who are temporarily resident are not subject to Australian tax on most foreign-sourced income and capital gains. However, they are taxed on non-Australian sourced income which relates to employment undertaken or services provided while a temporary resident of Australia.
If, for example, a temporary resident receives interest from an overseas investment, that interest will be exempt from Australian tax. But if they receive income from working overseas while a temporary resident it will be subject to Australian tax.
A problem which particularly concerns executives who are temporarily resident is how employee share schemes will be taxed.
Contact Foulsham & Geddes for further information.
