Tax Guide for Australians Living in Japan

Australian tax residency 豪州の税務上の居住地

Like the UK (and unlike the US), Australia uses residence-based taxation. Once you stop being an Australian tax resident, you generally only pay Australian tax on Australian-source income. You will file and pay taxes primarily in Japan.

Determining Australian tax residency is more complex than it might seem. The ATO applies four tests, and you are an Australian tax resident if you meet any one of them:

1. Resides test (the primary test)

This is the main test and considers your overall circumstances: where you live, your family ties, your economic connections, your intention regarding your stay. If you have moved to Japan with your family, established a home, and have no definite plan to return to Australia, you likely do not "reside" in Australia. However, if you maintain a home in Australia, keep your family there, or have strong ongoing ties, the ATO may still consider you a resident. The 2023 updated guidance (TR 2023/1) emphasizes that this is a holistic assessment — no single factor is determinative.

2. Domicile test

If your domicile (permanent home) is in Australia, you are treated as an Australian tax resident unless the ATO is satisfied that your permanent place of abode is outside Australia. If you have established a permanent place of abode in Japan (signed a lease or bought a home, moved your belongings, enrolled children in school, etc.), you can satisfy this exception. Your domicile of origin remains Australia unless you formally acquire a new domicile, but the "permanent place of abode" exception overrides this for tax purposes.

3. 183-day rule

If you are present in Australia for 183 days or more during the income year (July 1 to June 30), you are treated as an Australian tax resident — unless you can show that your usual place of abode is outside Australia and you do not intend to take up residence. Since you are living in Japan, this test is unlikely to apply unless you spend extended periods back in Australia.

4. Superannuation test

If you are a member of certain Australian Government superannuation schemes (CSS, PSS, or similar Commonwealth schemes), you are deemed an Australian tax resident regardless of where you live. This test primarily affects Australian public servants. Most people in Japan are not affected by this test.

Do you still file in Australia? 豪州での申告義務

Once you are an Australian tax non-resident, you only need to file an Australian tax return if you have Australian-source income. Common types of Australian-source income that require filing:

• Rental income from Australian property — Taxed in Australia. You must file an Australian return and pay tax on the net rental income. Non-residents are taxed at different rates — starting at 30% on the first dollar (no tax-free threshold for non-residents).
• Australian employment income — If you perform any work in Australia or for an Australian employer (even briefly), that income may be Australian-sourced.
• Dividends from Australian shares — Franked dividends are generally not subject to additional withholding for non-residents (the franking credit covers the tax). Unfranked dividends are subject to withholding tax (reduced by the treaty).
• Interest from Australian bank accounts — Subject to 10% withholding tax under the treaty (withheld at source by the bank). If withholding is applied, you may not need to file a separate return.
• Capital gains on Australian property — Non-residents pay CGT on Australian real property. Since 2012, the CGT discount (50% for assets held over 12 months) is not available to non-residents for gains accruing after May 8, 2012.

If you have no Australian-source income, you generally do not need to file an Australian return. Notify the ATO of your departure by lodging a notification of change of residency status through your myGov account or by contacting the ATO directly.

Australia-Japan tax treaty 日豪租税条約

The Australia-Japan tax treaty (Convention between Australia and Japan for the Avoidance of Double Taxation) has been in force since 2008, replacing the earlier 1969 treaty. It provides a comprehensive framework for allocating taxing rights and reducing withholding taxes.

Key treaty rates:

While these rates are not as favorable as the UK-Japan treaty (which has 0% on interest and royalties), they still provide meaningful reductions from Japan's domestic withholding rates.

Key treaty provisions for Australians:

• Employment income: Taxed only in the country where the work is performed (with the usual 183-day short-stay exception). If you work in Japan, Japan taxes your salary.
• Pensions: Generally taxable only in the country of residence of the recipient. If you live in Japan and receive an Australian pension, Japan has the primary taxing right.
• Capital gains: Gains from real property are taxed in the country where the property is located. Gains from shares are generally taxed only in the country of residence.
• Government service: Remuneration for government service is generally taxed only by the government that pays it — important if you worked for the Australian government.

Superannuation 豪州のスーパーアニュエーション

Superannuation ("super") is Australia's compulsory retirement savings system. Your employer contributes a percentage of your salary (currently 11.5% for 2024-25, rising to 12% from July 2025) into a super fund. When you move to Japan, your super stays in Australia — and understanding your options is essential.

Your super while living in Japan

Your superannuation balance remains in your Australian super fund and continues to be invested. However, several things change:

• No new employer contributions: Since your Japanese employer pays into the Japanese pension system (厚生年金), you will not receive super contributions. Your Australian super balance grows only through investment returns.
• No voluntary contributions (practically): You can technically make voluntary contributions to your super fund from overseas, but you generally cannot claim a tax deduction in either country for doing so. The contribution caps still apply, and the tax benefits are diminished when you are a non-resident. Most financial advisors recommend against voluntary contributions while overseas.
• No early access: You cannot access your super early just because you live overseas. Super is preserved until you reach your preservation age (60 for those born after June 30, 1964) and meet a condition of release. Living in Japan does not qualify as a condition of release.
• Insurance may lapse: Many super funds include life insurance and income protection cover. Some funds reduce or cancel this cover for members living overseas or for inactive accounts. Check with your fund to ensure you are not losing cover you rely on — or paying premiums for cover that will not pay out overseas.

DASP — Departing Australia Superannuation Payment

If you were in Australia on a temporary visa (such as a Working Holiday visa, 457/482 visa, or student visa) and have permanently departed Australia with your visa having expired or been cancelled, you may be eligible for a Departing Australia Superannuation Payment (DASP). This allows you to withdraw your super balance before preservation age.

DASP key points:

• Eligibility: You held a temporary visa (not a permanent resident or Australian citizen), your visa has expired or been cancelled, and you have left Australia.
• Tax rate: DASP is taxed at 35% on the taxed element (65% on the untaxed element). For Working Holiday visa holders, the rate is 65% on the entire amount. These rates are significantly higher than the normal super tax rates, reflecting the early access.
• How to apply: Apply through the ATO's online DASP application system. You will need your super fund details, passport, and evidence of departure.
• Japan tax: The DASP payment is generally treated as taxable income in Japan in the year received. You may be able to claim a foreign tax credit (外国税額控除) in Japan for the Australian tax withheld on the DASP. Consult a tax advisor to ensure you are not double-taxed.

Consolidate your super

If you worked for multiple Australian employers, you likely have super accounts scattered across multiple funds. Before leaving Australia (or even after), consolidate them into a single, low-fee fund. Multiple accounts mean multiple sets of fees eroding your balance. You can consolidate through your myGov account linked to the ATO — the process takes just a few minutes online.

Medicare levy exemption メディケア賦課金の免除

Australian tax residents pay the Medicare levy (2% of taxable income) to fund Australia's public healthcare system. When you become a non-resident, you are exempt from the Medicare levy because you are not entitled to Medicare benefits while living overseas.

If you still file an Australian return (because you have Australian-source income like rental income), claim the Medicare levy exemption on your return. You will need to complete the Medicare levy exemption section and indicate that you were not an Australian resident for Medicare purposes during the relevant period.

In Japan, you will be covered by either:

• 社会保険 (Shakai Hoken) — If you are employed by a company with 5+ employees. Your employer pays roughly half, you pay half. This covers health insurance (健康保険) and pension (厚生年金).
• 国民健康保険 (Kokumin Kenko Hoken / NHI) — If you are self-employed, unemployed, or working for a very small company. Premiums are based on your previous year's income and vary by municipality.

NISA for Australians 豪州人のためのNISA

Here is the good news: for Australians, Japan's NISA (少額投資非課税制度) is a genuinely excellent deal with none of the complications that plague US citizens.

• No PFIC issues: Australia does not have equivalent "Passive Foreign Investment Company" rules. You can invest in Japanese mutual funds (投資信託) through NISA without triggering punitive Australian tax treatment. Unlike US citizens who must avoid Japanese funds, you are free to use eMAXIS Slim, SBI V Series, or any other popular Japanese index fund.
• Genuinely tax-free: Since you are a Japanese tax resident and Australian non-resident, NISA gains are tax-free in Japan, and Australia has no claim to tax them. There is no second country waiting to tax your NISA gains.
• Similar to super's tax treatment: If you are familiar with Australia's concessional tax treatment of super fund earnings (15% tax on earnings within super), NISA is even better — it is 0% tax on all dividends and capital gains within the account.
• Full access to つみたて投資枠: Unlike US citizens (who effectively cannot use the つみたて / accumulation NISA because it requires mutual funds), Australians can fully use both the つみたて投資枠 (¥1.2M/year) and 成長投資枠 (¥2.4M/year).

One caveat: If you eventually return to Australia, your NISA account will be frozen (you cannot contribute as a non-Japan-resident). The investments remain, but you may need to eventually sell and transfer the proceeds. The capital gains will have been tax-free in Japan — Australia would generally not retroactively tax gains that accrued while you were a non-Australian-resident, but verify with an Australian tax advisor for your specific situation, particularly regarding the timing of any sale.

Australia-Japan totalization agreement 日豪社会保障協定

Australia and Japan have a Social Security Agreement (社会保障協定) that has been in effect since January 2009. The agreement serves two key functions:

1. Eliminating double contributions

The agreement prevents you from paying social security contributions in both countries simultaneously:

• Employed locally in Japan: You pay into the Japanese system (厚生年金 and 健康保険) and are exempt from the Australian Superannuation Guarantee on that employment.
• Temporarily posted from Australia: If your Australian employer sends you to Japan for a temporary assignment (up to 5 years), you can remain in the Australian social security system. Your employer continues super contributions and you are exempt from Japanese 厚生年金. You need a Certificate of Coverage from Services Australia to claim the exemption.

2. Combining contribution periods

The agreement allows you to combine pension contribution periods in both countries to meet minimum qualifying requirements:

• Australian Age Pension: The Age Pension requires 10 years of Australian residence (including periods counted under the agreement). If you have fewer than 10 years of Australian residence, Japanese pension contribution periods can help you meet the threshold.
• Japanese 老齢年金: Japan's old-age pension requires a minimum of 10 years of contribution periods (reduced from 25 years in 2017). Australian contribution periods (super contributions and working periods) can be counted toward this minimum.
• Important: Totalizing periods helps you qualify, but the benefit amount is based only on actual contributions to that country's system. You receive a proportional pension from each country based on your contributions to each, not a combined single pension.

Australian property while living in Japan 豪州の不動産

Many Australians moving to Japan keep an investment property or their former home back in Australia. Here is how Australian property is taxed when you live in Japan:

Rental income

Rental income from Australian property is taxable in Australia even as a non-resident. Key differences from resident taxation:

• No tax-free threshold: Non-residents are taxed from the first dollar at 30% (for income up to $135,000 in 2024-25), compared to residents who have a $18,200 tax-free threshold. This significantly increases the effective tax rate on rental income.
• Negative gearing still works: You can still claim deductions for expenses (interest, repairs, depreciation, property management fees, etc.) against the rental income. If expenses exceed income, the loss can be carried forward.
• PAYG withholding: If your property is managed by an agent, the agent may need to withhold tax from rental payments to non-residents under the foreign resident withholding rules.
• Japan reporting: You must also report the Australian rental income on your Japanese 確定申告 and claim a foreign tax credit (外国税額控除) for Australian tax paid, preventing double taxation.

Selling Australian property

Selling property while you are a non-resident has significant tax implications:

• No CGT discount: Since January 1, 2012, non-residents are not entitled to the 50% CGT discount on gains that accrue after that date. If you bought a property in 2015 and sell it while you are a non-resident in 2026, the entire capital gain is taxed at your marginal rate (starting at 30%) without the discount. This is a major difference from resident taxation, where you would pay tax on only half the gain.
• No main residence exemption (mostly): Since July 1, 2020, non-residents generally cannot claim the main residence CGT exemption — even if the property was their main residence before they moved overseas. There is a limited "life events" exemption (death, terminal illness, etc.), but for most people selling their former home while living in Japan, the full gain is taxable. This was a significant policy change that caught many expats off guard.
• Foreign resident capital gains withholding: When a non-resident sells Australian property for $750,000 or more, the buyer must withhold 12.5% of the purchase price and remit it to the ATO. You then file an Australian return and reconcile the withholding against your actual CGT liability.
• Japan reporting: Report the capital gain on your Japanese 確定申告 with a foreign tax credit for Australian CGT paid.

Frequently asked questions よくある質問

Do I need to notify the ATO when I move to Japan?

Yes. Update your address and residency status through your myGov account linked to the ATO. Lodge a tax return for your departure year and indicate the date your residency status changed. This ensures the ATO correctly applies non-resident tax rates going forward and stops expecting tax returns if you have no Australian-source income.

Can I keep my Australian bank accounts?

Yes, most Australian banks allow non-residents to maintain accounts. Update your address with the bank and notify them of your non-resident status. Interest on Australian bank accounts is subject to 10% withholding tax under the Australia-Japan treaty (withheld at source by the bank). You report this interest on your Japanese 確定申告 and claim a foreign tax credit for the Australian withholding.

What about my Australian shares?

You can keep Australian shares. Franked dividends (most dividends from large Australian companies) are not subject to additional withholding for non-residents — the 30% company tax already paid (represented by the franking credit) covers the tax obligation. Unfranked dividends are subject to withholding at the treaty rate. Capital gains on Australian shares by non-residents are generally not taxed in Australia (only Australian real property triggers non-resident CGT). You report dividends and capital gains on your Japanese 確定申告.

Can I access my super to buy a house in Japan?

No. The First Home Super Saver (FHSS) scheme allows eligible Australians to withdraw voluntary super contributions for a first home purchase — but only for a home in Australia. There is no provision to access super for property purchases overseas. Your super is locked until you reach preservation age (60+) and meet a condition of release, or until you qualify for DASP (temporary visa holders only).

I had a HECS/HELP debt. Do I still need to repay it?

Yes. Since 2017, Australians living overseas with a HECS-HELP (or other HELP) debt are required to lodge a worldwide income return with the ATO if their worldwide income exceeds the repayment threshold (around $54,435 for 2024-25). This applies even if you have no other Australian tax filing obligation. Repayments are calculated based on your worldwide income and are due when you lodge your Australian return. Failure to lodge can result in penalties. Check the ATO website for the current thresholds and lodge through myGov.

I am on a Working Holiday visa in Japan. How does that affect things?

If you are on a Working Holiday visa in Japan, you are a Japanese tax resident (assuming you intend to stay for the visa duration) and must pay Japanese taxes on your income. On the Australian side, whether you are still an Australian tax resident depends on the residency tests described above — short-term working holiday travelers may still be Australian residents. The Australia-Japan treaty's tie-breaker rules resolve dual residency. Your super in Australia continues to be preserved; you cannot access it while on a working holiday in Japan.

I am leaving Japan and returning to Australia. What should I do?

File your final Japanese 確定申告 (or appoint a 納税管理人 to file after you leave). Consider claiming the pension refund (脱退一時金) if you contributed to 厚生年金 or 国民年金 for at least 6 months — this refund is taxable in Australia. Close or decide what to do with Japanese bank and brokerage accounts. Your NISA account will be frozen (no new contributions) but investments can remain. See our Leaving Japan tax guide for the complete checklist.