Monday, November 12, 2012

My EPIK Adventure Part 3

I called the ATO (Australian Tax Office) this afternoon to find out the tax implications of working in Korea. There is a calculator here which will ask you a series of questions and then tell you if you are still considered an Australian resident for tax purposes. To summarise... either way the ATO screws you.

Australian Residents
Australia has a tax treaty with South Korea. I am not sure on all the technical details but I will try to summarise. If you are an Australian resident and you give your employer in South Korea a letter of Australian residency from the ATO you won’t pay any tax in Korea but you will have to lodge a tax return back in Australia. If you are lazy and don’t give your employer a letter of Australian residency you will be taxed in Korea AND in Australia. Yes, you read that right. Tax will be taken out of your pay in Korea and you will still have to lodge a tax return in Australia. On your Australian tax return I think you can claim the tax paid in Korea so in the long run you wouldn’t be any worse off, but it would mean you have less money in your monthly pay packet. 

Non Australian Residents
If you are not considered an Australian resident you don’t have to pay any tax to Australia on money you earn in Korea. HOWEVER, if you have investments or savings in Australia you will have to lodge a tax return in Australia and pay tax (at a significantly higher rate) on any income generated from those investments. 


  1. Philip - I am an Australian - but I have taken all my investments out of Oz. I am teaching in Korea but only started in August so worked for June July and August. I gave my school the certificate of residency so have not been paying taxes.

    Do you pay normal tax rates on income earned abroad?
    How easy is it to pay the Tax office if you closed your bank account in Oz?
    Next year will I have to pay taxes in Australia if I have no interests there and intend on living more than 3 years away?

    I know your not a tax expert but you may be able to help me with your experience.

    Many thanks


    1. Hi Thomas,

      The best thing to do would be to call the ATO. They have an international number which I believe is free to call.

      1) yes, I pay normal tax rates on income earned abroad because I am still considered an Australian resident.
      2) I still have my Australian bank accounts as I am planning to return to Australia in 2015, so paying the tax man isn't difficult. Call the ATO and ask how to pay tax bills from another country.
      3) If you are still considered an Australian resident, you have to pay tax there. Simple as that.

      If you decided to no longer be an Australian resident, you should let your school know so they can start taking tax out.

      If you decide to no longer be an Australian resident, when you want to return to Australia I believe you need to fill some paperwork out.

      I chose to remain an Australian resident because I am only leaving for two years, most of my salary in Korea is under the tax free threshold in Australia, and I have a number of investments in Australia which I didn't want to pay increased amounts of tax on.

      If you need to pay tax, one option might be to get a friend or family member to pay the bill and you can then pay them back.

      Run the numbers on your income. If you only worked in Oz for 3 months before coming, depending on how much you earned you may not have to pay anything if you are below the tax free threshold.

      A quick google found this mob which might be able to help you too

  2. Oh I worked 3 months in Oz before coming