General information only. Tax residency is fact-specific. Get advice for your circumstances.
Why tax residency matters (more than your visa or passport)
When people say “I’m living overseas, so I’m non-resident now”, I get why that feels intuitive. But the ATO doesn’t decide residency based on a single fact like your visa, your passport, or how many stamps are in your passport. It looks at the whole story: where you actually live, what ties you keep, and whether your life has genuinely moved offshore.
Why does this matter? Because tax residency is the switch that changes what Australia can tax — and what you need to report. Get it right and life is simpler. Get it wrong and things can become… character-building.
What changes if you’re an Australian tax resident
Broadly, Australian tax residents are taxed on worldwide income. That can include:
- foreign salary and wages
- foreign interest and dividends
- some foreign capital gains
You may also need to consider Medicare levy rules and reporting of foreign taxes paid (for example, the foreign income tax offset).
What changes if you’re a non-resident for tax
Non-residents are generally taxed on Australian-sourced income, and different tax rates/offsets may apply. But “non-resident” does not mean “Australia disappears completely”. For example, Australian property income and property sales can still create Australian tax outcomes.
The ATO’s residency framework (plain-English overview)
The ATO uses a set of tests to decide whether you’re a resident for tax. There’s no magic day-count rule that works for everyone. The tests are about your behaviour and connections — not your intentions alone.
Think of it like this: the ATO is asking, “Where is your life actually based?” Your answer needs to match the evidence.
The key residency tests Australians run into
1) The “resides” test (the most important, the most misunderstood)
This is the big one. The ATO looks at the ordinary meaning of “reside” — where you live as a matter of fact. It weighs things like your home, your routine, your work arrangements, and where your close personal ties sit.
Common factors the ATO looks at include:
- where you regularly live and sleep
- where your spouse/partner and children live
- where you work and how stable that work arrangement is
- whether you’ve set up a settled life overseas (lease, utilities, local memberships)
- whether Australia still looks like “home base” (property available, memberships, frequent returns)
2) The domicile test (and “permanent place of abode”)
Many Australians keep an Australian domicile. Under this test, you can still be treated as a resident unless you establish a “permanent place of abode” outside Australia.
In practice, “permanent” here doesn’t mean forever — it’s about whether your overseas living arrangements are settled and durable.
Evidence that helps:
- long-term lease or owned home overseas
- utilities and local registrations
- stable employment or business arrangements overseas
- local community ties (schooling, memberships)
3) The 183-day test (why it’s not a shortcut)
People love the 183-day rule because it sounds like a simple threshold. It’s not a reliable shortcut. Depending on your facts, you can be resident even if you’re in Australia less than 183 days — and in some situations you can be treated as resident if you’re here more than 183 days.
Treat day-count as a data point, not the decision-maker.
4) The Commonwealth superannuation test (government employees)
This applies to certain Australian government employees (and their spouses/children) who are members of specific Commonwealth superannuation schemes. If this might be you, get advice early — the rules can override what you’d otherwise assume.
Real-world scenarios (examples Australians actually search for)
Example A — Overseas contract, but family stays in Australia
This is a classic “mixed facts” case. Family remaining in Australia often increases residency risk. It doesn’t automatically make you resident, but it’s a serious factor the ATO weighs.
If this is your situation, practical steps include documenting the arrangement, keeping clear travel records, and aligning living arrangements with your tax position.
Example B — Move overseas indefinitely, rent out the Australian home
Renting out your Australian home can help demonstrate Australia is no longer your base — but it’s not the only thing that matters. You still need to show you’ve established a settled home overseas.
Example C — Digital nomad (multiple countries, no long-term lease)
Digital nomad life can create residency ambiguity because it can look like you haven’t established a stable home anywhere. That’s where documentation and a clear “facts story” really matters.
At minimum, keep: entry/exit records, contracts/invoices, accommodation history, and evidence of where you actually spend your time.
Example D — Returning to Australia mid-year
When you move back, the year can be split into different residency periods. Timing can matter for bonuses, share vesting, asset sales, and foreign income.
Common traps and red flags for expats
Here are patterns that often cause problems:
- keeping an Australian home available for your use
- spouse/children staying in Australia
- continuing Australian employment arrangements without clear overseas establishment
- assuming flights/day-count are decisive
- your “story” not matching your evidence (banking, memberships, property, mail)
Practical checklist: evidence to support your position
If you want your tax position to stand up, keep evidence like:
- overseas lease/home purchase, utilities, local registrations
- employment contract, payslips, foreign tax statements
- travel log (entry/exit) and timeline of key events
- Australian ties changed: memberships cancelled, home rented/sold, mail redirected
What to do if you’re unsure
If your facts are mixed, get advice before the big moments — selling property, triggering large capital gains, share vesting, or setting a return date. A short residency assessment upfront can save a lot of pain later.
How we can help
At Expat Taxes Australia, we help Australians living overseas with residency reviews, expat tax returns, and planning around foreign income and capital gains.
If you’d like us to sanity-check your residency position, book a consult and we’ll map the facts properly.
