Managing Tax Obligations for Non-Resident Carpenters

Non-Resident Tax Rates

As a non-resident carpenter, you’ll pay income tax from the first dollar you earn with no tax free threshold. For the 2024-25 income year, foreign residents pay 30% on income up to $135,000, then 37% on income between $135,001-$190,000, and 45% on anything over $190,001. This differs from Australian residents who get the first $18,200 tax-free and don’t pay the medicare levy.

Working Holiday Maker Rates

If you’re on a working holiday visa (subclass 417) or Work and Holiday visa (subclass 462), special tax rates apply. You’ll pay 15% on your first $45,000 of income earned in Australia, then normal foreign resident rates after that. Your employer must register as a working holiday maker employer to give you these lower rates – otherwise they’ll apply withholding tax at the higher non-resident rate of 30%.

Temporary Resident Status

Some visa holders might qualify as temporary residents for tax purposes. To be a temporary resident, you need to hold a temporary visa, not be a resident of Australia under social security law, and not have a spouse who is an Australian resident. Temporary residents generally only pay Australian tax on income earned in Australia, not worldwide income like Australian tax residents.

Essential Tax File Number Requirements

Getting a Tax File Number is one of your first priorities when starting work in Australia. Without a TFN, your employer must apply withholding tax of 45% from your wages. That’s a huge chunk of your pay that you’ll need to try to get back when you lodge your tax return.

Applying for Your TFN

You can apply for a TFN online if you’re already present in Australia and hold a permanent migrant visa, visa with work rights, overseas student visa, or visa allowing indefinite stay. The application takes about 20 minutes and you’ll need your passport details and an Australian address where your TFN can be posted. You should receive your TFN within 28 days.

Using Your TFN at Work

Once you get your TFN, give it to your employer straight away using a Tax File Number Declaration form. This tells your employer your residency status and ensures they withhold the correct amount of tax from your wages. Keep your TFN secure – it’s yours for life even if you change jobs or leave Australia for another country.

Superannuation Obligations and Opportunities

Most non-resident carpenters working as employees are entitled to superannuation contributions from their employer. The Super Guarantee Rate is currently 11.5% rising to 12% from July 2025. Your employer must pay this on top of your wages into a super fund, regardless of whether you’re an Australian citizen or foreign resident.

Choosing Your Super Fund

As an employee, you can choose which super fund receives your contributions. You’ll want to pick a fund that accepts non-residents and aligns with your plans. If you’re only in Australia temporarily, consider whether you’ll eventually withdraw your super or leave it invested until retirement.

Making Additional Contributions

Foreign residents can make personal super contributions if they meet eligibility requirements. You might be able to claim a tax deduction for personal contributions if you’re not an employee for Super Guarantee tax purposes or satisfy the 10% test. However, you need assessable income in Australia to claim the deduction.

Accessing Your Super

Non-residents who aren’t temporary residents face the same conditions of release as residents. When you access your super, the taxable components get included in your Australian assessable income and taxed at normal rates. If there’s a double taxation agreement between Australia and your home country, that might affect how your super gets taxed and prevent double tax.

GST Registration and BAS Requirements

Whether you need to register for GST depends on how you’re working in Australia. If you’re working as an employee, GST isn’t your concern. But if you’re operating your own carpentry business, different tax law requirements apply.

GST Registration Thresholds

You must register for GST if your carpentry business has a GST turnover of $75,000 or more from sales connected with Australia. This includes all your business income, not just profit. Once registered, you charge 10% GST on your services and lodge Business Activity Statements.

BAS Lodgement Requirements

If you’re registered for GST, you’ll need to lodge BAS returns monthly, quarterly or annually depending on your turnover. Most businesses with turnover under $20 million lodge quarterly. Your BAS reports GST collected, GST paid on business purchases, and other obligations like PAYG withholding if you have employees.

Record Keeping for GST

Keep detailed records of all your business income and expenses. You’ll need tax invoices for purchases over $82.50 to claim GST credits. Good record keeping makes BAS preparation easier and protects you if the Australian Taxation Office asks questions.

Maximising Work-Related Deductions

Non-resident carpenters can claim many of the same work-related deductions as Australian residents, which helps reduce your taxable income. These deductions apply whether you’re a permanent resident, temporary resident, or foreign resident working in Australia.

Tools and Equipment Deductions

You can claim deductions for tools and equipment you buy for work. If a tool costs $300 or less and you use it mainly for work, claim the full cost in the income year you buy it. For tools costing more than $300, you claim the decline in value over several years.

Keep receipts for tool repairs, insurance, and secure storage. You can only claim the work-related portion if you also use tools for private purposes.

Vehicle and Travel Expenses

If you use your vehicle for work – driving between job sites, visiting suppliers, or picking up materials – you can claim vehicle expenses. Keep a logbook showing work versus private use to calculate your deduction. You can claim fuel, repairs, insurance, registration, and depreciation for the work-related portion.

Travel expenses between job sites, including fuel, tolls, and parking, are deductible. However, travel from home to your regular workplace generally isn’t deductible unless you’re carrying bulky tools or equipment.

Safety and Protective Equipment

Work-specific clothing and safety equipment are deductible. This includes safety boots, hard hats, high-visibility clothing, and protective gear required for carpentry work. You can also claim cleaning costs for work uniforms.

Training and Certification Costs

Costs for trade-related licenses, certifications, and training courses that help you earn income are deductible. This might include carpentry courses, safety training, or ticket renewals required for your work.

Capital Gains Tax Considerations

If you’re a foreign resident and sell assets like tools, equipment, or property used in your carpentry business, capital gains tax may apply. The tax treatment depends on your residency status and whether the asset has the necessary connection with Australia. Non-residents generally only pay capital gains tax on Australian assets, not foreign source income or assets outside Australia.

Record Keeping and Compliance

Good record keeping protects you during ATO audits and ensures you claim all entitled deductions. Keep records for five years after lodging each tax return, regardless of whether you’re an Australian tax resident or foreign resident.

Essential Records to Keep

Keep all receipts, invoices, and bank statements showing work-related expenses. For vehicle expenses, maintain a logbook for at least four consecutive weeks showing work trips. Take photos of receipts using the ATO’s myDeductions tool.

Document the work-related purpose of each expense, when you incurred it, and the business use percentage if also used privately.

Tax Return Lodgement

Foreign residents must lodge Australian tax returns to report income earned in Australia. This applies even if you’re only here temporarily or plan to leave Australia during the year. Lodge by October 31 or use a registered tax agent who can extend the deadline.

Your tax return reports all Australian employment income, claims work-related deductions, and calculates any refund or additional tax owed. Include foreign source income if you have HELP, VSL, or AASL study debts, as these create additional obligations regardless of your residency status.

Changes in Residency Status

If your residency status changes during the income year – for example, you arrive from another country or become a resident for tax purposes – special rules apply. You’ll need to calculate your tax obligations for each period and may need to consider worldwide income once you become an Australian tax resident.

Working with Professional Help

Managing tax obligations when you’re running a carpentry business in Australia but your usual place of abode is outside of the country brings its own set of challenges. Your residency status—determined by your living arrangements, how long you stay, and whether Australia is your permanent home—has a big impact on the tax you pay and what you need to report. If your usual place of abode is overseas, you’re generally a non-resident for tax purposes, which means different tax rates and rules apply compared to someone living in Australia full-time.

Because of these differences, working through your tax obligations can get complicated quickly, especially if you’re managing a carpentry business, reporting GST, or dealing with visa changes. Understanding whether your usual place of abode is inside or outside Australia affects not only your income tax but also things like superannuation and capital gains. It’s easy to miss deductions or make mistakes with deadlines if you’re not familiar with how these rules work for non-residents, so having a tax professional who understands foreign resident requirements can make a real difference.

Getting your Tax File Number sorted, keeping good records, and knowing what deductions you can claim are practical steps that help you stay on top of your tax obligations. Ready to get your tax situation sorted so you can focus on your carpentry work? Talk to one of our team members—we have experience helping non-resident tradespeople manage their Australian tax requirements and make sure they get the deductions they’re entitled to, no matter where their usual place of abode is.