One of the biggest worries for Korean-Australians is simple — “Do I pay tax in Korea and in Australia?”
Say you receive a Korean dividend, or sell a Korean home while living in Australia, or draw a pension or interest from Korea. If both countries tax it, what happens?
The short answer: in most cases the Korea–Australia tax treaty stops you paying twice. The key machinery is the treaty and the foreign tax credit.
The short version
- Korea and Australia have a tax treaty.
- It’s designed to prevent double taxation on the same income.
- The rules differ by income type — dividends, interest, employment, pensions, capital gains.
- Most of it is adjusted through a foreign tax credit.
- It is not automatic — reporting matters.
Why does a treaty exist?
Without one, Korea could tax and Australia could tax. A $10,000 Korean dividend might be taxed in both. To prevent that, the two countries signed the Korea–Australia tax treaty in 1982.
First: which country’s resident are you?
The treaty’s starting point is residence. Article 4 (Residence) defines a tax resident, and if both countries treat you as a resident, a tie-breaker applies.
See → Tax residency: Korea and Australia
What is a foreign tax credit?
In plain terms, your country recognises the tax you already paid to another country. Say you paid $150 of Korean dividend tax and Australian tax of $300 arises — Australia credits the $150 already paid to Korea. So it’s Korea $150 + Australia’s extra $150 = $300 total, not twice. That’s the foreign tax credit.
The rules differ by income type
Dividends — Article 10
For an Australian resident receiving, say, a Samsung dividend: (1) Korea withholds → (2) you report the dividend in Australia → (3) the Korean tax is credited in Australia. That’s the usual shape.
Interest — Article 11
Interest from Korean deposits or bonds can be taxed at a limited rate in the source country, then reported and credited in your country of residence.
Employment income — Article 15 (Dependent Personal Services)
A Korean salary received by an Australian resident (or vice versa) turns on where the income arises and where the work is actually done. Remote work and overseas postings can get complicated.
Pensions & super — Article 18 (Pensions and Annuities)
This can include Korea’s national pension, Australian super, and retirement pensions. Which country taxes a pension is a key issue on a return to Korea.
See → Moving back to Korea — what happens to your super?
Capital gains
This varies by asset type. In particular, real property is generally taxed first by the country where it is located. So even an Australian property sold by a Korean resident is often taxed first by Australia.
Which country first?
Usually it’s (1) the source country, then (2) the country of residence. For example: Korean dividend → taxed in Korea → credited in Australia; Australian rental income → taxed in Australia → credited in Korea.
The mistakes people make most
- ❌ “I paid in Korea, so I don’t report in Australia.” — No. An Australian resident reports overseas income too.
- ❌ “There’s a treaty, so it’s automatic.” — No. Most of it needs reporting.
- ❌ “I only pay in one of the two.” — Not necessarily. Often you report in both and apply the credit.
Legal references
Convention between Australia and the Republic of Korea for the Avoidance of Double Taxation (signed 1982, in force 1984). Key articles — ⚠️ note the numbering differs from the OECD model in places (e.g. elimination of double tax = Article 24):
- Article 4 — Residence
- Article 10 — Dividends
- Article 11 — Interest
- Article 15 — Dependent Personal Services (employment income)
- Article 18 — Pensions and Annuities
- Article 24 — Methods of Elimination of Double Taxation
Source: ATO income tax treaties · treaty text (AustLII)
In closing
The Korea–Australia treaty doesn’t erase tax — it adjusts so the same income isn’t taxed twice. And the core of it is three things — tax residency, the type of income, and the foreign tax credit.