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How do overseas doctors pay tax in Australia?

Understanding how doctors from overseas, who are not Australian citizens, pay tax in Australia is critical if you are considering working down under.

Moving overseas can be an exhilarating phase of life but it’s important to do so with your eyes open.

There is so much to think about to ensure the move is financially viable.

Finding the right job, the right accomodation and weighing up the cost of living in Australia is just part of the battle.

Ensuring you appreciate your tax obligations BEFORE you travel is also imperative.

You’ll have the potential to earn a high income so it’s advisable to work with an expert tax accountant to reduce your tax in Australia and maximise your take home pay.

Here’s what you need to know.

Residency status

As an overseas doctor working as a GP in a medical clinic in Australia, you will be classed as an Australian resident.

That’s important because there are different rules for those classed as non-Australian residents.

It means you will need to pay tax on your worldwide income, including overseas shares, rental properties, bank interest and other investments.

Those classed as non-residents need only pay tax in Australia on what they earn here.

But Australian residents are typically taxed at a lower rate than non-residents because they receive the ‘tax-free threshold’.

Tax rates

Australia uses a progressive tax system.

The more you earn, the more tax you pay with that rate rising at four intervals.

Residents receive a tax-free threshold of $18,200.

They then begin paying tax on every dollar earned beyond that.

The tax brackets for 2023-24 are:

  • $0-18,200 – no tax payable
  • $18,201-$45,000 – 19c for every $1 over $18,200
  • $45,001-$120,000 – $5,092 plus 32.5c for each $1 over $45,000
  • $120,001 – $180,000 – $29,467 plus 37c for each $1 over $120,000
  • $180,001 and over – $51,667 plus 45c for each $1 over $180,000

Hence, a doctor earning $300,000 per year would pay $105,667 in tax, before the assessment of deductions.

Non-residents are taxed at a flat rate of 32.5% for the first $120,000, rising to 45% for incomes above $180,000.

Hence a non-resident earning $300,000 would likely pay $135,000 in tax before deductions.

Deductions and offsets

All doctors, including overseas doctors working in Australia, may be eligible for various deductions and offsets related to their profession.

Deductions and offsets may include any work-related expenses such as:

  • registration fees
  • professional development costs
  • tools
  • equipment
  • uniforms
  • phone expenses,
  • internet expenses 
  • vehicle expenses

To claim these expenses, it is essential to keep detailed records in the event you are required to substantiate them and work closely with an accountant who has experience working with medical professionals.

Medicare levy and surcharge

Australian taxpayers, including overseas doctors, contribute a Medicare levy which helps fund the country’s public health system.

The Medicare levy is a flat rate charged at 2% and is paid by most Australian taxpayers.

Exceptions include temporary visa holders who have not applied for permanent residency or are not eligible for Medicare under a reciprocal healthcare agreement.

In addition, anyone who does not have private health insurance may attract a Medicare levy surcharge (MLS).

The MLS has four tiers starting with a base tier of 0% for singles who earn less than $93,000 or families who earn less than $186,000.

Beyond that, the following surcharges apply:

1% surcharge – Singles earning $93,001-$108,000 and families earning $186,001-$216,000.

1.25% surcharge – Singles earning $108,001-$144,000 and families earning $216,001-$288,000.

1.5% surcharge – Singles earning over $144,001 and families earning over $288,001.

Tax treaties

Australia has tax treaties with many countries including the United Kingdom.

These treaties are designed to both track tax evasion and ensure individuals are not subjected to paying tax twice.

Each treaty is different and it is advisable to engage the advice of an experienced tax agent when working overseas.

This will ensure you meet your tax obligations as well as optimising your return.

Tax file numbers

A tax file number (TFN) is your personal reference number when working in Australia and is used for tax and superannuation purposes.

You don’t have to have a tax file number to work in Australia but your employer will need to withhold more tax from you if you don’t have one.

For this reason, it is advisable to apply for a TFN.

You should advise your employer of your TFN within 28 days of commencing work.

You can apply for one here.

Contact Health Recruitment Australia today

Tax commitments can seem overwhelming at a glance.

But an experienced tax professional can take the stress out of working overseas so you can concentrate on soaking up the experience.

That’s why talking with Health Recruitment Australia makes so much sense!

HRA works closely with tax experts who specialise in the medical industry. It’s just part of the incredible service you’ll receive by working with us.

Matching overseas doctors of all ages to the right clinics in Australia is what we do best.

And there is a significant GP shortage in Australia that exists right now!

There are multiple opportunities available for doctors interested in making the move.

If you’re one of the thousands of doctors considering emigrating to Australia to work, let HRA make your job easier.

We’ll help you find you the ideal city, area, and practice to work in.

And we’ll even help with all that annoying paperwork too.

Why not start with an informal, no-obligation discussion with the experienced team at Health Recruitment Australia? Contact us.

Enquire now, and we’ll be
in touch shortly!

 

Enquire now, and we’ll be
in touch shortly!