Published on and written by Cyril Jarnias
Moving to or investing in Tasmania from overseas means stepping directly into two intertwined tax systems: the Australian federal income tax and the state land tax. For an expatriate, the challenge isn’t just “paying taxes,” but understanding who taxes what, at what rate, and how to avoid unpleasant surprises, particularly regarding double taxation or a change in residency status.
This article details tax obligations in Tasmania for expatriates, based on local legislation and international treaties, notably with France. It serves as a practical guide for anyone working, renting, or owning property in this region.
Understanding the Australian Tax Architecture
Before delving into the specifics of Tasmania, it is essential to distinguish two levels that overlap but are distinct.
In Australia, income tax is a federal responsibility, administered by the ATO (Australian Taxation Office), and applies to all types of income (wages, rents, interest, dividends, pensions, capital gains). In parallel, land tax on the value of land is a state matter. For instance, in Tasmania, it is managed by the Commissioner of State Revenue under the Land Tax Act 2000.
This duality explains why an expatriate employee in Hobart who is also a property owner with a rental in Launceston might, in the same year, file an income tax return with the ATO, pay land tax to the State of Tasmania, and potentially pay stamp duty upon purchasing property.
Tax Residency: The Keystone of Income Tax
In Australia, the determining factor is not the visa, but tax residency as interpreted by the ATO. Several tests apply, sometimes concurrently.
The Main Residency Tests
The resides test examines the taxpayer’s overall behavior: length and continuity of presence, principal place of abode, family ties, employment ties, location of assets, and social ties. A long-term move to Tasmania, stable employment, and an organized life there often lead to qualification as an Australian tax resident.
The domicile test operates on the principle that a person’s domicile of origin remains Australia until they establish a permanent home elsewhere. Conversely, an expatriate from Europe or Asia on a limited stay in Australia generally has their domicile outside the country.
Number of days present in Australia beyond which a person is presumed to be a tax resident, barring exceptions.
A fourth criterion, the Commonwealth Superannuation test, mainly concerns certain federal public servants posted overseas and their pension schemes; it marginally impacts “classic” expatriates in Tasmania.
Resident, Non‑Resident, Temporary Resident: Who Declares What?
The most significant consequence of these tests is the scope of the taxable base:
An Australian tax resident is taxed on their worldwide income. A non-resident only pays federal tax on their Australian-sourced income. A temporary resident benefits from a favorable regime, generally declaring only Australian income and certain capital gains.
This distinction is central for an expatriate working in Tasmania while maintaining a property portfolio in Europe or Asia. An Australian tax resident must include rental income received overseas in their ATO return, while applying international treaties to avoid double taxation, whereas a temporary resident can, in many cases, exclude it from their Australian taxable income.
Income Tax Rate Scale: Residents and Non‑Residents
Income tax rates in Australia follow a progressive logic but differ significantly based on tax status.
2024‑2025 Scale for Residents
For the 2024‑2025 fiscal year, tax residents benefit from a tax-free threshold and progressive brackets:
| Taxable Income Bracket (AUD) | Tax Rate | Comment |
|---|---|---|
| 0 – 18,200 | 0% | Tax-free threshold |
| 18,201 – 45,000 | 16% | On the portion above 18,200 |
| 45,001 – 135,000 | 30% | Intermediate rate |
| 135,001 – 190,000 | 37% | High income |
| > 190,000 | 45% | Maximum marginal rate |
This scale applies to taxable income (after allowable deductions), to which levies like the 2% Medicare Levy may be added for residents with access to the public healthcare system.
2024‑2025 Scale for Non‑Residents
Non‑residents have no tax-free threshold: tax applies to the first dollar of Australian income. The scale is as follows:
| Taxable Income Bracket (AUD) | Tax Rate | Characteristic |
|---|---|---|
| 0 – 135,000 | 30% | No tax-free threshold |
| 135,001 – 190,000 | 37% | High rate on high incomes |
| > 190,000 | 45% | Maximum marginal rate |
For an expatriate who is a property owner with a rental in Tasmania but residing overseas, these rates will apply to net rental income, unless their tax status changes later.
Specific Regime for Working Holiday Makers
Holders of Working Holiday visas (subclass 417 or 462) are subject to a specific regime, often called the Backpacker Tax. They are generally considered non‑residents but benefit from a dedicated scale:
| WHM Taxable Income 2024‑2025 (AUD) | Tax Payable |
|---|---|
| 0 – 45,000 | 15% of income |
| 45,001 – 135,000 | $6,750 + 30% on amount above 45,000 |
| 135,001 – 190,000 | $33,750 + 37% on amount above 135,000 |
| > 190,000 | $54,100 + 45% on amount above 190,000 |
To benefit from the 15% rate on the first $45,000, the employer must be registered with the ATO as an employer of Working Holiday Makers. Otherwise, the standard non-resident rate (30% or 32.5% depending on the reference year) applies from the first dollar, significantly increasing the tax bill.
Working Holiday Visa (WHM) holders do not benefit from the $18,200 tax-free threshold. They are generally exempt from the Medicare Levy. If their annual income is less than $45,001 and comes solely from wages correctly taxed under the WHM regime, they are not required to file a tax return. They may choose to do so to reclaim any tax overpaid.
Practical Steps: TFN, Filing, and Deductions
Entering the Australian tax system requires obtaining a Tax File Number (TFN). This personal number, issued by the ATO, must be provided to the employer within 28 days of starting employment. Without a TFN, the employer is required to withhold tax at the maximum rate (45%), often creating a significant overpayment to be rectified.
Key information on the annual tax return, deadlines, and filing methods.
The financial year runs from July 1 to June 30.
The return must be filed by October 31. An extension (sometimes until May) can be obtained through a registered tax agent.
Filing is done via the myGov portal and the myTax tool.
The return is largely pre-filled thanks to the Single Touch Payroll system which automatically reports employer data.
For an expatriate, filing a return serves two purposes: ensuring compliance and, if applicable, claiming a refund if the tax withheld at source exceeded the final tax liability, particularly in cases of mid-year status change, departure from Australia, incorrect application of non-resident or WHM rates, or numerous work-related deductions.
These deductions cover, when conditions are met, expenses incurred to earn income: safety equipment and clothing, tools, mandatory training (like professional licenses), work-related portion of phone or internet use, travel between work sites, mileage at the standard rate (88 cents/km in 2024‑2025 up to 5,000 km), contributions to certain schemes, tax agent fees, and donations to approved organizations. For a property-owning expatriate, expenses related to a rental activity (agent fees, loan interest, landlord insurance, accounting fees, etc.) are also deductible from the rental income base.
Land Tax in Tasmania: Structure and Scale
Land tax in Tasmania is an annual tax on land ownership, levied by the State based on the value of the land. It is independent of income tax, although in practice, land tax charges are often considered as deductions when calculating taxable rental income for the ATO.
General Principle
The tax is based on the Assessed Land Value (ALV), i.e., the land value as determined by the Office of the Valuer‑General, adjusted via a revaluation factor. Valuations follow procedures under the Valuation of Land Act 2001 and are not carried out by the tax administration itself.
All property owners registered as of July 1 are liable for land tax for the following year, subject to exemptions or special regimes. Assessment notices are generally sent between October and March.
A crucial element for investors: when the same owner holds multiple taxable parcels, Tasmania applies aggregation of values. The tax is calculated on the combined value of all taxable land, which can push the value into higher brackets and increase the bill.
Tasmanian Land Tax Scale
Tasmania applies a system of thresholds and cumulative fixed amounts. Official sources mention a threshold around $125,000 in land value and a maximum marginal rate of 1.5%.
The income tax scale can be summarized indicatively, noting that exact amounts may slightly differ based on official updates published by the tax administration.
| Taxable Land Value (AUD) | Estimated Annual Tax | Rate Structure |
|---|---|---|
| Up to ~100,000 | $0 | Full threshold |
| ~100,000 – ~500,000 | $50 + 0.45% on amount above threshold | Intermediate rate |
| Above ~500,000 | $1,850 + 1.5% on excess amount | Higher marginal rate |
The law also provides for rounding to the nearest 10 cents when the calculation does not result in a whole number.
For a person who becomes a non‑resident while retaining property in Tasmania, this tax will continue to be due each year, as tax residency has no impact on the land tax base. However, non‑resident status affects the federal income tax related to those same properties (rents, capital gains).
The Three Main Land Categories in Tasmania
To determine if land is taxable or not, and at what rate, Tasmania distinguishes three main classifications.
General Land: The Default Taxable Base
The General Land (GEN) category corresponds to the vast majority of taxable land. It includes:
– residential rental properties (investment rental, property leased long-term or as furnished tourist accommodation);
– secondary residences (holiday homes, shacks);
– vacant land, whether buildable or not;
– land and buildings for commercial or industrial use.
For an expatriate buying an apartment in Hobart to rent out, the underlying land will generally be classified as General Land, with the land tax scale applied.
Principal Residence Land: The Exempt Main Residence
Principal Residence Land (RES) benefits from a full exemption from land tax. To obtain this classification, several conditions must be met:
To register land as a principal residence, the owner must: hold at least 50% of the land, occupy a dwelling on it as their principal residence as of July 1 of the relevant year, and not have another parcel already registered as principal residence land.
This exemption is not limited to individuals: a company can benefit from the classification if a shareholder holding at least 50% of the shares lives in the property as their principal residence and does not have another declared principal residence. Similarly, certain trusts may be eligible depending on the situation of the primary beneficiary.
For an expatriate relocating their home to Tasmania and buying their principal residence there, it is imperative to promptly apply for reclassification as ‘Principal Residence Land’ with the State Revenue Office. Without this step, land tax will continue to apply to the property as if it were an investment.
Primary Production Land: The Exemption for Agricultural Activities
The third category, Primary Production Land (PPL), covers land used predominantly for primary production activities conducted as a business: growing plants for sale, livestock, beekeeping, commercial fishing, forestry, certified forests, private timber reserves, etc.
When conditions are met, this land is generally exempt from land tax. Again, the onus is on the owner to demonstrate the economic reality of the activity (scale, regularity, purpose of sale, and professional nature).
In mixed cases, where a single parcel includes both a principal residence and agricultural activities or a rental use, Tasmania applies a partial classification: the portion corresponding to the principal residence or primary production may be exempt, while the remainder is treated as General Land.
Exemptions and Incentive Schemes for Housing
Tasmania uses land tax as a housing policy lever. Several exemptions or rebates target owners who convert or create long-term rental housing, which may interest expatriate investors.
Conversion from Furnished Tourist Accommodation to Long-Term Rental
A property previously used as short‑stay visitor accommodation (short-term rental, e.g., furnished tourist accommodation for stays under four weeks) can benefit from a one-year land tax exemption if converted to long-term rental.
The main conditions are as follows:
– the land must initially be classified as General Land;
– a residential tenancy agreement must commence between March 15, 2018, and June 30, 2026;
– the dwelling must have been used for short‑stay accommodation for most of the three months preceding the tenancy.
This scheme can be attractive for a foreign owner who decides, for example, to remove their property from short-term rental platforms to secure a year-round lease, thereby guaranteeing stable, regular rental income.
Three-Year Exemption for New Construction for Rental
Tasmania also provides a three-year exemption from land tax for new dwellings leased long-term, subject to several criteria:
– land classified as General Land;
– a building never previously occupied or sold;
– initial occupancy certificate issued between February 8, 2018, and June 30, 2026;
– signing of a residential lease for at least 12 months.
The exemption ceases if the dwelling is sold, if its use changes, if there is no lease for more than six weeks, or if the land is no longer classified as General Land. For an expatriate developer or investor building to rent, this three-year window can represent substantial savings.
Rebates and Concessions for Transition or Disaster
Among other mechanisms to know:
Several schemes allow for rebates or the maintenance of concessions on land tax. A rebate is possible when temporarily holding two residences (moving before sale), if the purchase of the new home occurs between April 1 and June 30 and the old one is not sold before October 1 of the following year. A concession may be maintained for 1 to 2 years if the principal residence or farmland becomes uninhabitable/unusable due to a disaster (fire, flood). This concession can also be extended for one year after the owner’s death. Finally, specific rebates exist for some retirees using a limited part of their home or land for other purposes.
Lastly, targeted exemptions apply to certain organizations (religious, charitable, educational, medical, environmental, cultural), public libraries and museums, retirement villages, or certain veterans’ associations. They do not directly concern most expatriates but may apply if a property is made available to such an entity.
Surcharge for Foreign Investors: The Foreign Investor Land Tax Surcharge
Non‑resident expatriates must be aware of the Foreign Investor Land Tax Surcharge (FILTS), a land tax surcharge targeting foreign owners of residential land in Tasmania.
This surcharge applies:
– to properties classified as General Land held by a “foreign person” from July 1, 2022;
– to properties held by a company or trust that becomes foreign from that date;
– where the land can be used primarily for residential purposes.
Land classified as Principal Residence Land is spared the surcharge, encouraging expatriates who genuinely settle in Tasmania to have their home recognized as their principal residence.
Surcharge rate applied to foreign buyers for acquiring residential property in Tasmania.
For an expatriate investor, the analysis must therefore include not only the land tax and its thresholds, but also the potential application of the FILTS and stamp duty surcharges.
Stamp Duty in Tasmania: Market Entry Cost
Alongside the annual land tax, Tasmania levies transfer duties on property acquisitions, known as transfer duty or stamp duty. The top marginal rate reaches 4.5% on taxable values over $725,000, with a formula adding 4.5% on the portion exceeding this threshold to a fixed amount of $27,810.
To mitigate this cost, the State has implemented targeted measures:
For acquisitions between February 18, 2024, and June 30, 2026, first home buyers benefit from a full exemption for an existing property valued up to $750,000. A 50% reduction is available for some retirees ‘downsizing,’ with specific caps. Exemptions also apply to transfers of farmland within families, partitions following separation, and transfers into joint tenancy between partners.
These schemes mainly benefit Tasmanian residents. An expatriate buying property in Tasmania without establishing their principal residence there must anticipate a combination of stamp duty at acquisition, potentially increased by a foreign purchaser surcharge, then annual land tax and, where applicable, the FILTS surcharge.
Property Income, Capital Gains, and Non‑Residents: Interaction with Income Tax
Once owning property in Tasmania, the expatriate moves beyond the purely property sphere back to the ATO and federal tax.
Australian Rental Income
Whether a property owner is a resident or non‑resident for income tax purposes, rent from properties located in Australia is taxable in Australia. The difference lies in the tax scale and access to certain tax credits, not the principle.
For a non‑resident, this rental income will be added to any other source of Australian income (local wages, Australian pensions, etc.) and taxed at the non‑resident scale. There is no tax-free threshold; even a small seasonal rental can trigger tax from the first dollar of net profit.
Expenses related to earning rental income (land tax, loan interest, agent fees, repairs, insurance, accounting) are fully deductible. The Australian tax system also allows, under conditions, deductions for depreciation on buildings and fixtures, and offsetting a rental loss from one property against income from another.
Property Capital Gains and Withholding Tax
The sale of property in Tasmania triggers the application of Capital Gains Tax (CGT) at the federal level. For a resident, the capital gain may benefit from a discount (CGT discount) after a certain holding period. For a non‑resident, this discount is generally not available: the capital gain is taxed in full according to the applicable scale.
When selling property in Australia, non-resident sellers are subject to a withholding tax (Foreign Resident Capital Gains Withholding). The buyer must generally withhold 15% of the sale price and remit it to the Australian tax authority, for transactions above a certain threshold. This amount is a prepayment of the final tax on the capital gain. The non-resident seller can reclaim all or part of this withholding by declaring their income and calculating the tax actually payable on the taxable capital gain.
A frequently overlooked point: if, at the time of signing the sale contract, the owner is considered a foreign resident, they often lose the benefit of the main residence exemption on the capital gain, even if they lived in the property in the past. The timing of the definitive departure from Australia relative to the sale of a Tasmanian residence therefore has a very concrete tax impact.
International Tax Treaties: Focus on France
Expatriates from countries that have signed a double taxation agreement with Australia – such as France, Belgium, or Switzerland – benefit from mechanisms to avoid the same income being taxed twice.
In the Franco‑Australian case, the treaty provides that: cooperation between the two countries will occur in several key areas.
Real estate income and capital gains are taxable in the State where the property is located. Business profits are taxable in the State of residence, except in the case of a permanent establishment in the other State. Dividends, interest, and royalties may be taxed in both States, with withholding tax caps (e.g., 10% for interest, 5 to 15% for dividends). Private pensions are generally taxable in the State of residence, while public pensions remain taxable in the paying State, unless the nationality of the other State is acquired.
Concretely, an Australian tax resident in Tasmania with an apartment rented in France will continue to pay French tax on that property but must also declare it to the ATO; they will then benefit, depending on the case, from a foreign tax credit equal to the French tax or an exemption with consideration for the effective rate, according to the method chosen by the treaty. Conversely, a French resident receiving rent from a property in Tasmania will be taxed in Australia on that rent but can offset this Australian tax against their French tax thanks to the credit provided by the treaty.
The correct application of tax rules, particularly due to Tasmanian specifics (FILTS, local land exemptions, stamp duty surcharges) not covered by federal treaties, often requires the intervention of a tax advisor specialized in international mobility.
Tasmanian Specifics for Expatriates: Assistance and Context
Beyond tax legislation, Tasmania has demonstrated, particularly during the health crisis, a certain level of attention to temporary visa holders. One can cite, for example, the one-off payment of a $250 assistance to some visa holders in severe hardship, as well as increased grants to non‑governmental organizations to support people in precarious situations, including Working Holiday Makers.
The measures presented do not bring structural change to income tax or land tax rules. They rather reflect a situation where authorities use budgetary and social tools to influence the situation of non‑residents and expatriates.
Compliance, Audits, and Disputes: What to Anticipate
Tasmania, like the ATO, has audit and penalty mechanisms. On the land tax side:
The State Revenue Office conducts verification checks (data matching) to control the consistency of declarations. A false declaration about a property’s use (e.g., a leased principal residence) results in penalties, interest, and back taxes. Late payments incur daily interest and a penalty tax of around 25%. In the absence of regularization, coercive measures (enforced payment plan, securities, legal action) can be applied.
To contest a land tax assessment, the owner has 60 days to lodge a formal objection with the Commissioner of State Revenue, based on legal criteria (classification, application of tax law, factual errors). However, deeming the tax “unfair” or “too high” is not a valid ground. If the objection concerns the land value itself, it must be lodged with the Office of the Valuer‑General, also within 60 days of notification of the new valuation.
The ATO can impose fines for late lodgment (according to a scale per 28‑day period of delay) and apply interest on unpaid taxes. Failure to lodge a required return, omission of income, or abusive deductions can lead to reviews or audits, for residents and non‑residents alike.
Strategy and Best Practices for an Expatriate in Tasmania
For an expatriate considering Tasmania as a home or an investment destination, several best practices can make the difference between a managed situation and an accumulation of unpleasant surprises:
For property owners in Tasmania, it is crucial to: clarify one’s tax residency status upon arrival and at every change; promptly apply for a TFN and an ABN if needed; anticipate the combined burden of federal income tax and Tasmanian land tax, including foreign surcharges and stamp duties; utilize applicable land tax exemptions while respecting their criteria; maintain rigorous accounting of income and expenses to optimize deductions; verify the scope of tax treaties with one’s home country; and consider the tax implications of any status change on capital gains taxation.
Tasmanian and Australian taxation is neither more nor less complex than that of other developed countries, but it has powerful specificities, particularly regarding residency, treatment of non‑residents, and property taxation. For an expatriate, knowing them in advance allows transforming a perceived opaque environment into a clear framework, making it possible to make informed choices between renting, investing, permanent settlement, or departure.
Taxation operates on several levels (federal, state, international). The goal goes beyond simply paying the amount due: it is about aligning one’s lifestyle and investment choices with the regulations in force. Correct filing and transparent action allow benefiting from the favorable regimes provided by law.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
