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What income do nonresidents have to pay tax on?

Nonresidents must pay tax on all the salary and wage income that they earn in Australia, which is probably withheld from their paychecks. Nonresidents must also pay tax on Australian rental income as well as capital gains involving taxable Australian property.

Nonresidents must also pay withholding tax on interest and unfranked dividends from Australian sources. The tax on interest amounts to 10% and the tax on unfranked dividends to about 30%, depending on the circumstances. Neither interest nor dividends are included in assessable income, which means you don’t need to lodge a tax return if they are the only Australian income you derive. These taxes are withheld automatically by the bank or company.

You must advise the financial institution paying you interest or the Australian company paying you dividends of your overseas address. If you do not, taxes will be withheld at the higher rate of 45%.