Australian resident for tax purposes

Am I an Australian resident for tax purposes? 10 factors to consider

When it comes to lodging Australian expat tax returns, it’s important to understand whether you are an Australian resident for tax purposes or not.

Why is this important? Well, first and foremost, if you are taxed as an Australian resident, you will be required to pay tax on your worldwide income from all sources at high Australian tax rates.

Non-residents however, are only taxed on income earned and sourced specifically in Australia.

As an Australian expat, most of your income is likely to be from overseas. Thus, declaring yourself as a non-resident will ensure that you get the full benefit of the lower tax regime in your country of residence. Having said that, it’s always worth checking your circumstances with us first, because, recent budget announcements means that the benefits of non-residency are not so clear-cut nowadays!

If you are working overseas, paying tax as an Australian Resident often means you will pay tax on your overseas income without wreaking any of the benefits that come with it, such as access to lower overseas tax rates, and no practical access to Australia’s medicare system.

As the ATO carries out in-depth analyses and audits of Australian expats, (particularly audits relating to an expat’s residence status), it’s vital that you prove you really are a non-resident for Australian tax purposes when lodging your tax returns.

Am I an Australian resident for tax purposes or a non resident? Here’s ten things to consider . . .

1. Submit evidence of your permanent living situation

Long-term rental agreements, mortgages and issues of correspondence to the same address will all act as evidence of having a permanent residence overseas.

2. Electoral Registry

Remove or update your details on the Australian electoral roll to show that you are no longer considered an Australian permanent resident.

3. Take ATO residency tests

The primary test that the Australian Tax Office provides is the ‘Resides Test’. If you don’t satisfy the resides test, the ATO will expect you to take one of three other tests to prove your residency status:

  • ‘The Domicile Test’,
  • ‘The 183 Day Test’, and
  • ‘The Commonwealth Superannuation Test’

You only need to pass one of these four tests to be considered as a resident of Australia. If you don’t satisfy any of these tests, then you may be considered a non-resident for Australian tax purposes.

4. Sell or lease out your Australian property

Selling or leasing out your property so that it is not available for your use, assists to provide evidence that you are not considering returning to Australia soon. Bear in mind that there may be Capital Gains Tax issues to consider in both cases, whether you choose to sell or lease out your property, so it’s wise to check in with us first.

5. Evidence of overseas finances

Open an overseas bank account and an overseas credit card (if applicable) and live day to day from those accounts instead of via your Australian bank accounts.

6. Buy a one-way ticket

A one-way ticket out of Australia shows to the Australian Taxation Office that you are not considering returning anytime soon.

7. Provide ATO with foreign address

This could be a long-term rental property or real estate.

8. Foreign drivers license

Obtain a driver’s license in your country of residency.

9. Acquire overseas investment assets

Whilst we cannot provide you with any specific investment advice, it may be a good idea to begin building up a portfolio of overseas investments, to support that you’ve largely cut ties with Australia.

10. Health insurance

Obtain health insurance in your country of residence and don’t make claims on Medicare.

Why is Australian tax residency so complex? I’m confused

Working out whether you are an Australian resident for tax purposes is a unfortunately, unnecessarily complex.

What makes determining your residency status so difficult is that whether you are an Australian resident for tax purposes is that residency is very much based around the facts and circumstances of your life, and as your facts and circumstances differ from every other expat, there’s no hard and fast rules to determine your residency status.

Having said that, Australia does require a person to pass at least one of Australia’s four residency tests (see point 3 below). However this leads to another problem that complicates residency unnecessarily – for two of the main tests of residency (‘Resides’ Test and the ‘Domicile’ Test), the phrases used in those tests are NOT defined anywhere in Australia’s tax acts. So to understand how to apply those tests, it means that you need to turn to the courts to understand historical and recent case-law relating to residency, and you also need to turn to various tax-rulings published by the Australian Taxation Office!

Combine those two issues, i.e. that residency is based on your facts and circumstances, that differ from every other expat on earth, and that half of Australia’s tax residency tests are unnecessarily subjective and vague, defined by principles developed in common-law court cases (that evolve over time), and it means that for most people, determining their own residency status is complex and potentially fraught with danger if you get things wrong!

Even for many tax accountants, determining whether a person is an Australian resident for tax purposes or a non-resident for Australian tax purposes, is difficult.

Determining a person’s residency status is akin to trying to hit a rapidly moving target on a spinning wheel, from a rapidly moving platform, that is spinning in the opposite direction. In short, it’s a frustrating, complex, and difficult task, at best!

Confused about whether you are an Australian Resident for tax purposes? Relax . . . our team are here to help

Speak to an Australian expat tax specialist today

If you’re an expat or potential expat, you’ll already know that residency is unfortunately quite a complex issue as far as Australian taxes go, and because of the disparity in how residents are taxed (on worldwide income) versus non-residents (only on Australian source income), getting it wrong can be very costly.

So, resolving the issue of your tax residency status is incredibly important.

As such, if you’re confused about Australia’s complex residency rules we highly recommend that you book a “Residency – Am I a resident of Australia for Australian taxation purposes” tax consultation with one of our tax specialists in order to get to the bottom of the issue and put your mind at ease.

Book your residency consultation today

Simply fill out our booking form (below) and choose the “Residency – Am I an Australian tax resident” consultation (our most popular appointment), with us and our team will have your tax residency issues sorted in no time.


Please note: To simplify the booking process, the available appointment times (listed above) will be displayed in your timezone, not ours!

What will we discuss in our residency consultation?

When you book a residency consultation with us, the agenda is fluid and can be adjusted to suit your needs, but as a guide, the topics that you can expect us to discuss include the following:

We’ll discuss:

  • your circumstances as an Australian expat or potential expat (if you’re considering a role overseas)
  • whether or not you are likely to be deemed a resident or non-resident for Australian taxation purposes based on those circumstances,
  • tax traps and the taxation consequence of your residency status relating to the income that you earn and the assets that you own,
  • potential tax planning opportunities available to you based on our opinion of your residency status, and
  • recent legislative changes relevant to non-residents (e.g. CGT changes for Australian property, HECS/HELP debt reporting obligations, Foreign resident CGT Withholding legislation etc),
  • Plus

  • we’ll discuss and answer any questions that you both may have.

As you can see, there’s a lot of tax issues to consider, and sadly, these issues are complex and challenging. If you’re thinking of moving overseas, be sure to book a ‘Residency’ tax consultation with us today.

We’ll be able to step you through the issues so that you’ll be able to minimise your taxes, maximise your wealth, and take advantage of all the various tax opportunities that are available whilst minimising the risks!

Get in touch with our Expat Tax Services team today!

Shane Macfarlane CA
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Comments 14

  1. I’ve been an Australian citizen, non-resident for tax purposes as I’ve been a resident in France for the past 10 years (where I’m an employee and pay taxes). I’ve just recently purchased an investment property in Sydney so I will need to declare the eventual rental income. However, I understand there is a tax treaty between France and Australia to avoid double taxation of income.
    What do I need to do in Australia? How is my tax calculated?

    Thank you

    1. Hi Lina,

      Thanks for your question.

      Now that you have purchased an Australian rental property you will need to prepare an Australian tax return and include your rental income and deductions.

      The treaty between Australia and France sets out how rental income is taxed. The rental income will be taxable in your Australian and French tax returns, you will need to pay tax first in Australian and then any tax you have paid in Australia will be able to be claimed as a foreign tax credit in your French tax return.

      It is important to note that Australian and France have different tax years so the timing of lodging your Australian return first will be important to ensure you have paid the Australian tax first and then can claim the foreign tax offset in your French return.

      On our website you can schedule a free ‘general enquiry’ call with one of our team if you’d like to find out more.



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  3. If I’m living in the UK and have done for just over 2 years, and become a non-resident of Australia, how does this affect me with the following:
    If I return to live and work in Australia in a few years, how do I re-instate my residency status and am I eligible straight away on my return, to access medicare, centre-link if needed, etc?
    Do I need to tell my bank that I am no longer an Australian resident, and if I do, how does that affect me with any accounts (even if they have nothing in them?)
    What happens to my HECS debt (currently I am not earning near the threshold)?

    1. Hi Jennifer,

      Your residency status is determined by your personal circumstances, when you return to Australia you should review the ATO residency tests. If you satisfy any of the test you will be an Australian Tax Resident. Your residency status will be advised to the ATO in your tax return.

      As an Australian Citizen who is a non-resident expat, living and working overseas, although you can’t use Medicare forever, you CAN use Medicare and claim Medicare benefits for a period of up to 5 years from the date that you first left Australia.

      Note, if your Medicare card has an expiry date of less than the 5 years, practically speaking you won’t be able to renew your Medicare card whilst living overseas and so in that instance, you will be limited in claiming Medicare benefits to the date of expiry of your card.

      If you return within 5 years of your departure and your Medicare card is still valid you can claim using the same card. If this isn’t applicable you will need to apply for a new Medicare card on your return but you will be required to prove you are a resident by providing proof of your address.

      You should have a read of Shane’s article Medicare for Australian Citizens overseas as this explains eligibility for Medicare in detail.

      In regards to claiming Centrelink you should be eligible for most Centrelink benefits on your return, you will have to prove that you are living in Australia to be eligible for benefits.

      You should advise your bank that you are a non-resident for tax purposes and update your residential address. This way they will withhold tax on interest they pay. As a non-resident you do not receive any tax free threshold, so even if you only earn $1 of interest from your Australian bank you are required to lodge a tax return and pay tax on that income.

      For your HECS debt even though you are below the repayment threshold, there are additional requirements for non-residents.

      There is both a reporting threshold, AND a repayment threshold.

      The repayment threshold, is $45,881 for 2019/2020 and if your worldwide income exceeds that amount, then you’ll be obligated to make a compulsory HELP/HECS debt repayment.

      The reporting threshold on the other hand is equal to 25% of the repayment threshold. That is the threshold above which you are required to calculate and report your worldwide income to the ATO. For 2019-2020 the reporting threshold totals only: $11,470.

      This means that if your worldwide income exceeds $11,470 for the 2019-2020 Australian financial year, then you are required to calculate and report your worldwide income to the ATO via a foreign income reporting schedule in your 2020 tax return, even though your income may not exceed the repayment threshold. Here is a separate article about HELP/HECS debt obligations for Australian expats

      If you need any assistance with any of your questions reach out to our team and we will be glad to assist you.



  4. Shane is super helpful, patient and his explanations were clear and concise. Highly recommend seeking his assistance if you are an expat in need! I had a tax question as a result of my situation caused by the Covid 19 pandemic and on a subject that I would normally be completely lost on, he helped me to understand and resolve the issue swiftly and easily. I will recommend to my expat friends.

    1. Post

      Hi Elizabeth,

      It was our pleasure to be able to assist. Thanks so much for your kind words also. All of us here at Expat Tax Services very much appreciate your comments.



  5. Pingback: The ATO knows about your overseas bank accounts! | Expat Tax Services Australia

  6. Hi
    I am a NZ citizen and tax resident and I earn income in Australia as an extension of my NZ business.
    My Australian domiciled income does not include income from which non resident withholding tax is deducted but includes business consulting income and the occasional sale of bloodstock at Australian auction sales. The horses are imported into Australian and typically sold at auction within 1 to 2 weeks of importation. I include my Australian earned income as part of my NZ income tax return.
    I do not have a permanent establishment or residency in Australia.

    My question is Based on my situation am I required to file an Australian income tax return?

    1. Hi George,

      Thanks for your question. There are many factors to consider to answer your question properly. It is probably necessary to have a call to discuss further.

      If you would like to discuss can you book a free ‘General Enquiry’ appointment with Shane through our website appointments page



    1. Post
  7. Do you advise on local residency / non-residency issues in Malaysia? I am an Australian relocating to Malaysia and have some questions about the local tax situation for expats in Malaysia. Are you able to assist with this?,

    1. Post

      Hi Peter,

      Thanks for your message. We do provide residency advice in relation to Australian expats moving to Australia. In fact we look after a large number of clients who are based in Malaysia, and as we were based in Malaysia originally, we’re quite familiar with the various questions that we’d expect you to ask about.

      If you are interested in booking a residency consultation, you can do so directly via the Book an Appointment page on our website.

      Regardless, I’ll follow up by sending you a quick email just so that you have my contact details so that you can reach out to me to learn more if you wish.



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