Moving to Australia Tax Guide 2026: US Tax Obligations, FBAR, and Superannuation

Australia is one of the most popular destinations for American expats, with a high standard of living, English language, and strong job market. But the Australian-American tax combination is one of the most complex for expats: two countries with high tax rates, a superannuation system the US doesn’t recognise, and a foreign investment review board that affects property purchases. If you’re moving to Australia, understanding these obligations before you arrive is essential.

This guide covers Australian tax residency tests, how to avoid double taxation through the US-Australia 1982 tax treaty and foreign tax credits, the critical issue of superannuation and US taxation, FIRB property approval requirements, and FBAR/FATCA obligations for all Australian financial accounts.

US Tax Obligations for Americans in Australia

The United States taxes its citizens on worldwide income regardless of where they live — one of only two countries in the world that does so (the other being Eritrea). Moving to Australia does not reduce or eliminate your US tax obligation. You must file Form 1040 every year, reporting all Australian income.

FEIE vs Foreign Tax Credits

Americans in Australia have two main tools to avoid double taxation: the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC). The FEIE (Form 2555) excludes up to $126,500 of foreign earned income from US taxation in 2024. The FTC (Form 1116) credits Australian taxes paid against your US liability dollar-for-dollar. For most Americans in Australia, the foreign tax credit is more advantageous because Australian income tax rates (19–45% + 2% Medicare Levy) are high enough that taxes paid to Australia typically eliminate most or all US liability. The FEIE can result in a “stacking” problem that pushes remaining income into higher US brackets — many expat CPAs recommend the FTC for those in the Australian higher brackets. You cannot use both FEIE and FTC on the same income in the same year.

Part-Year Residency in Year of Arrival

In the year you move to Australia, you are a part-year resident of both countries. For US purposes, you file as a full-year US resident (Form 1040) because the US taxes citizens on worldwide income regardless. For Australian purposes, you are a non-resident for the period before Australian residency is established (taxed at a flat 32.5% non-resident rate), then an Australian resident from the date residency begins. Understanding the split-year Australian treatment is important to calculate the correct FTC credit for the partial year.

Australian Superannuation: The American Tax Nightmare

Australian superannuation is the single most complex tax issue for Americans living in Australia. Superannuation is Australia’s mandatory employer-funded retirement system: employers must contribute 11% of your salary (rising to 12% by 2025) into a superannuation fund of your choice. For Australians, super is a tax-advantaged pension. For Americans, it is a compliance nightmare.

Why the US Does Not Recognise Super as a Pension

The US-Australia tax treaty does not include superannuation in its pension provisions. The IRS does not treat Australian superannuation funds as “qualified retirement plans” under US tax law. This means: (1) Employer super contributions may be includable in your US taxable income as they are made; (2) Earnings inside the super fund may be taxable in the US annually as they accrue; (3) PFIC (Passive Foreign Investment Company) rules may apply to the underlying investments in your super fund, creating punitive US tax consequences on gains. Many Americans with Australian super face annual US reporting on Form 8621 (PFIC) or treat the fund as a grantor trust (Form 3520/3520-A).

Practical Approaches

Most expat CPAs specialising in US-Australian taxation take one of three positions: (1) Treat super contributions as excluded wages (if using FEIE) or FTC-covered income; (2) File Form 8621 annually and pay US tax on PFIC distributions/gains using the mark-to-market or excess distribution method; (3) Treat the super fund as a foreign grantor trust and file Form 3520. There is no definitively “right” answer — the IRS has not issued specific guidance on Australian superannuation treatment, meaning this area carries inherent uncertainty. Given the potential for large penalties (Form 3520 late penalties: 35% of fund value), this is the one area where hiring a US expat CPA with specific Australian experience is absolutely essential before your first filing.

Australian Tax Residency Tests and FIRB Property Rules

Australian Tax Residency

Australia uses multiple tests to determine tax residency, and the rules are more nuanced than a simple 183-day count. The primary test is the “resides” test: if you actually reside in Australia (have your permanent home, family, and life there), you are an Australian tax resident from the date you establish that connection. Secondary statutory tests apply when the primary test is unclear: (1) Domicile test: Australian resident if domicile is in Australia, unless permanent place of abode is outside Australia; (2) 183-day test: Australian resident if present in Australia for 183+ days in a year, unless usual place of abode is outside Australia and you have no intention to take up residence; (3) Superannuation fund test: applies to Commonwealth government employees. For most Americans moving to Australia permanently, the resides test triggers residency from arrival. Once you establish Australian tax residency, Australia taxes your worldwide income.

FIRB (Foreign Investment Review Board) Rules for Americans

Americans buying property in Australia must comply with the Foreign Investment Review Board rules. As a foreign investor (which Americans are, unless they have permanent residency), you typically need FIRB approval before purchasing real estate. Key rules: New dwellings: approval is generally granted for purchasing new dwellings as primary residence; fee is approximately 1% of the property value (e.g., $8,000 on an AUD 800,000 property). Established dwellings: temporary residents (those on temporary visas, including most Americans on work visas) cannot purchase established (existing) dwellings for investment; they can purchase one established dwelling as their primary residence, but must sell when leaving Australia. Vacant land: approval required with conditions to develop within specified timeframe. Permanent residents and citizens: FIRB rules generally do not apply after obtaining permanent residency. FIRB applications are filed online and typically processed within 30 days — most standard residential purchases are approved without issues, but the approval step is mandatory.

FBAR, FATCA, and US-Australia Treaty Benefits

FBAR Requirements

FinCEN Form 114 (FBAR) must be filed annually by June 15 if the aggregate maximum value of all foreign financial accounts exceeds $10,000 at any point during the year. For Americans in Australia, FBAR covers: Australian bank accounts (CommBank, Westpac, ANZ, NAB, etc.); Australian brokerage accounts; Australian superannuation accounts (whether these constitute “financial accounts” for FBAR is debated, but most conservative practitioners report them if value exceeds the threshold). FBAR penalties are severe: non-wilful violations up to $16,117 per account per year; wilful violations up to the greater of $161,166 or 50% of account balance per year. Filing is free and electronic via FinCEN’s BSA E-Filing System.

FATCA (Form 8938)

FATCA Form 8938 is filed with your tax return (not separately like FBAR). Thresholds for Americans abroad: $200,000 on the last day of the year or $300,000 at any point during the year (single); $400,000/$600,000 for married filing jointly. Australian financial institutions report US account holders to the ATO, which shares information with the IRS under FATCA, so non-compliance is increasingly detectable.

US-Australia Tax Treaty Benefits

The US-Australia tax treaty (1982, updated by 2001 protocol) provides: reduced withholding on dividends (15% general; 5% for corporate shareholders with 10%+ ownership); 10% withholding on interest; protections for business profits (permanent establishment rules); pension provisions (but notably NOT covering superannuation clearly, as discussed above). The treaty also contains a Savings Clause — the US reserves the right to tax its citizens as if the treaty did not exist, which limits the treaty’s usefulness for US citizens vs non-citizen residents. The US-Australia Totalization Agreement separately prevents double Social Security taxation: Americans working in Australia typically contribute to Australian superannuation (not US Social Security) unless on a short-term assignment under a Certificate of Coverage.