Tax considerations for Australians undertaking overseas fellowships

If you’re planning to undertake a professional Fellowship overseas, it’s essential to understand the tax implications before you depart, including your tax residency status and reporting obligations, to help you avoid surprises later. 

Tax Residency: Are You Still an Australian Resident?

Your tax residency status under Australian law determines what income you must declare. The Australian Taxation Office (ATO) considers several factors, including:

• Whether you intend to return to Australia;
• If you’ve established a permanent home overseas;
• The duration of your stay;
• Whether your family has relocated with you; and
• Your employment ties to Australia or abroad.

If you’re deemed an Australian resident for tax purposes, you must report all global income, including earnings from your overseas Fellowship, on your Australian tax return. You may be eligible for a foreign income tax offset to avoid double taxation, but this could still result in a top-up tax payable to the ATO.

Conversely, if you’re classified as a non-resident, you’re not required to declare overseas income. However, you must still report any Australian-sourced income, such as rental income or dividends. Non-residents may also face a higher level of capital gains tax on Australian assets like property or shares.

Example: Consider Dr Smith, undertaking a urology Fellowship in the United States for a period of two years. Despite living abroad, he retains strong ties to Australia, including owning a home in Brisbane being rented out, that he intends to return to.

Dr Smith is considered to be an Australian resident for tax purposes because he:

• is an Australian citizen who is working overseas for a finite period.
• shows every intention of returning to live in Australia once his overseas stay ends.
• owns a home in Australia that he will reoccupy on his return from overseas.

As such, he must declare his United States income, along with his Australian-sourced income in his Australian tax return. He would also likely need to complete a tax return in the United States for income earned there. Care should be had here to consider the timing differences in financial years to ensure any foreign tax credits can be claimed in Australia.

Broadly, a postdoctoral fellowship that includes stipends and allowances for living expenses is generally assessable in Australia if you are still considered an Australian tax resident.

Other Considerations

• Relocation and visa costs are generally not deductible.
• If you suspend your private health insurance while overseas, you may still be liable for the Medicare Levy Surcharge if your combined income exceeds $A101,000 (individuals) or $A202,000 (families) (for the 2025-2026 Financial year).
• Australia has double taxation agreements with many countries to prevent double taxation. These agreements may affect how your Fellowship income is taxed and should be reviewed.

Contact Pilot

Before embarking on your Fellowship, contact Kristy Baxter, Angela Stavropoulos or your Pilot advisor to ensure your residency status and obligations are clearly understood. Early planning can help you stay compliant and avoid costly errors.

Article posted 15 October 2025 to Pilot Partners.