Residency For Australian Tax Purposes

There isn’t a day I don’t get asked about this topic.

So I thought a very brief, and I mean brief, outline of the very basic rules regarding the ATO’s practice should be discussed.

So here goes.

To understand your tax situation, the first thing you need to do is to work out whether you are an Australian resident for tax purposes.

Australian residents are generally taxed on their worldwide income whereas non-residents are generally taxed only on their Australian-sourced income.
 
This article outlines the residency tests for individuals.
Different tests apply to companies and trusts.
The residency tests used by the Tax Office to determine your residency status for tax purposes are not the same as those used by other Australian agencies for other purposes such as immigration.

Generally, you are an Australian resident for tax purposes if you have:

• always lived in Australia
• moved to Australia and live here permanently
• been in Australia for more than half of the financial year, unless your usual home is overseas, and you do not intend to live in Australia.

Some Common Situations

The following shows your residency status in some common situations, though it may depend on whether the country you are going to or coming from has a tax treaty with Australia.

• If you go overseas temporarily, and do not set up a permanent home in another country then you are generally an Australian resident for tax purposes.
      
• If you are an overseas student enrolled in a course at an Australian institution that is more than six months long, then you are generally an Australian resident for tax purposes.
    
• If you are visiting Australia for more than six months and for most of that time work in the one job and live at the same place then you are generally an Australian resident for tax purposes.
       
• If you are holidaying in Australia, or are visiting for less than six months then you are generally NOT an Australian resident for tax purposes.
      
• If you migrate to Australia, and intend to reside here permanently then you are generally an Australian resident for tax purposes.
      
• If you leave Australia permanently then you are generally NOT treated as an Australian resident for tax purposes from the date of your departure.

Residency Tests And Tools

There are four main tests for residency:

Resides

Primary test – if you reside in Australia according to the ordinary meaning of the word, you don’t need to apply any of the other 3 tests

Statutory tests – if you don’t satisfy the residency test (the primary test) then you may still be considered an Australian resident if one of the 3 statutory tests is satisfied.

• Domicile
    
• 183 day rule
    
• Superannuation

If you have recently arrived in Australia or are leaving Australia, then contact me to help you work out your residency status. You can do this at http://tinyurl.com/2n57vb

 

About The Author

Warren Kruger is an Australian Tax Specialist and Advisor.

For a FREE Report "7 Essential Strategies to Reduce Your Taxation NOW!"  Sign Up RIGHT NOW  in the Opt In Box located on the top right hand side of this article.

About The Author

Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report “7 Essential Strategies to Reduce Your Taxation NOW!”,enter your name and email address in the Opt In Box located on the top right hand side of this article.

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