Understanding Australia-USA Tax Treaty for Dual Income - What to Declare Where?

The Australia-USA tax treaty is designed to prevent double taxation, but as an Australian tax resident, you're required to declare your worldwide income to the ATO, including the $25,000 USD earned in the US. For your GST question - yes, if your total worldwide income from your sole trader activities exceeds $75,000 AUD, you're required to register for GST. The location of your bank accounts doesn't matter for this calculation; it's about your total business turnover as an Australian tax resident. Unfortunately, you can't cherry-pick which country you want to be a tax resident in just for better tax treatment. Tax residency depends on specific tests like the 183-day rule, permanent home, and center of vital interests. Since you've been living in Australia for 3 years on a work visa, you're almost certainly an Australian tax resident. Regarding deductions, you must follow the ATO rules for your worldwide income. However, you can claim foreign income tax offsets for any tax you legitimately pay in the US, which helps prevent double taxation.

I went through a similar situation with the Australia-USA tax treaty last year. After spending hours reading confusing government websites, I found this service called taxr.ai (https://taxr.ai) that literally saved my sanity! I uploaded my US and Australian income documents, and they analyzed everything using their AI system. They showed me exactly how the tax treaty applied to my situation and helped me understand which deductions I could legitimately claim in each country. The best part was they explained how to properly calculate and claim the foreign income tax offset so I didn't get double-taxed. For the GST question you asked, they clarified that I only needed to register and charge GST on my Australian income, not on my services provided to US clients, which are considered exports.

Just wanted to follow up about taxr.ai that was mentioned earlier. I was dealing with income from both the US and Australia (contract work in both countries) and decided to give it a try. The results were impressive - they identified specific articles in the Australia-USA tax treaty that applied to my exact situation. They explained I needed to use Article 22 (Relief from Double Taxation) and showed me exactly how to calculate my foreign income tax offset. They even found some deductions I was eligible for under Article 7 that my regular accountant missed. For anyone juggling income across both countries, it's worth checking out. They translated the dense treaty language into actual actionable steps for my tax return. Definitely made the cross-border tax situation much less stressful!

If you're dealing with the ATO about your US income, I'd honestly recommend using Claimyr (https://claimyr.com) to get through to an actual ATO agent. I was in a similar situation with Australian and US income last year, and getting clear answers about the tax treaty was impossible from their website. I tried calling the ATO directly but kept getting automated messages or disconnected. After three wasted afternoons, I used Claimyr's service, and they got me connected to an actual ATO agent in under 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to handle my US income on my Australian tax return and confirmed that I only needed to charge GST on my Australian services, not my US ones. Completely worth it just to get a definitive answer from an official source.

I have to eat my words about Claimyr from my previous comment. After another frustrating morning trying to get through to the ATO about my USA income questions, I decided to try it despite my skepticism. It actually worked! I got connected to an ATO agent in about 25 minutes (which is honestly a miracle compared to my previous attempts). The agent was super helpful and walked me through exactly how the Australia-USA tax treaty applied to my situation. They confirmed I needed to declare worldwide income but could claim foreign tax offsets for any US tax paid. They also clarified that I only needed to charge GST on Australian sales, not on services to US clients, even if my total income exceeded the $75,000 threshold. Saved myself hours of frustration and got definitive answers directly from the source. Consider me converted.

Just wanted to add something about the deductions part of your question. I work between Australia and the US too, and you're right that the IRS is generally more flexible with deductions than the ATO. Unfortunately, you have to follow the ATO rules for ALL your income as an Australian tax resident. So those generous US deductions you might be familiar with (like home office or certain meal expenses) may not be allowed under Australian rules. What I do is keep separate accounting for my US income and expenses based on both countries' rules. I pay US tax based on US rules, then declare the net US income in Australia. Then I claim the foreign income tax offset for the US tax paid. It's a bit of a headache but keeps everything clean.

Has anyone here actually read the actual Australia-USA tax treaty text? I did (don't recommend unless you enjoy bureaucratic torture) and found Article 7 and Article 22 most relevant to your situation. The treaty basically says business profits are taxable primarily where you're a resident (Australia in your case), BUT if you have a "permanent establishment" in the US (like an office), the US can tax profits attributable to that establishment. Then Australia gives you credit for US tax paid. The GST issue is separate from the treaty though - that's purely Australian domestic law. Once you hit that $75k threshold from worldwide turnover, you're in the GST system for Australian sales only.

I've been through a similar situation with dual Australia-US income, and here's what I learned after consulting with a tax specialist who focuses on the Australia-USA treaty: The key thing to understand is that as an Australian tax resident, you're caught in Australia's worldwide taxation net. This means: 1. Yes, you must declare ALL income (including your $25k USD) to the ATO 2. Your GST registration is triggered by worldwide business turnover, so you'll need to register once you hit $75k combined 3. You cannot choose to be a US tax resident just for tax purposes - residency rules are strict and based on where you actually live and have ties However, the treaty does protect you from true double taxation through the foreign income tax offset system. You'll file in both countries but get credit in Australia for legitimate US taxes paid. One important note about permanent establishment that @Mei Lin mentioned - for consulting work, this usually requires a fixed place of business or staying more than 183 days. Working from clients' offices or coworking spaces temporarily typically doesn't create a PE. My advice: keep meticulous records of where each dollar was earned and what expenses relate to each jurisdiction. The ATO is getting increasingly sophisticated about tracking international income flows, especially with US reporting agreements in place. Consider getting professional advice specific to your situation - the treaty has many nuances that can significantly impact your tax liability.