Determining Your Tax Residency

As an Australian expat, filling out your tax return can be complex – especially if you’re unclear of your tax obligations. So, before moving abroad, it’s vital to know your tax residency. Generally, expats fall under one of these categories: an Australian resident for tax purposes, temporary resident, or foreign resident. Fortunately, the ATO has simple “residency tests” to determine your category.

Resides test

If you ordinarily reside in Australia, you are classified as an Australian tax resident. This means that the domicile and 183-day tests are not applicable. If you are unsure, these factors can help you determine your tax residency status:

• Physical presence (where you are primarily living)
• Where your family lives
• Why you have travelled abroad (for work, to travel, etc.)
• Connections regarding business and/or employment, and;
• The location and maintenance of your assets

If you do not pass the resides test, you are still considered an Australian resident, provided you satisfy either the domicile or 183-day test.

Domicile test

According to the ATO, a domicile is your “permanent place of adobe” by law. Your domicile may be your “domicile of origin” (your birthplace), or by choice (where you have moved to a new home, intending to make it permanent). Therefore, you’re considered an Australian resident if your domicile (i.e. permanent home) is located in Australia.

Unlike a temporary or transitionary place of abode, your domicile should have a “degree of permanence”. This means, it should be close to your workplace, and you should be fully moved in.

183-day test

Unlike the aforementioned tests, this only applies to expats arriving in Australia. As the name suggests, you’re considered an Australian resident if you’ve been living here for over half the income year (either consecutively or non-consecutively).

If you meet these requirements, you’ll be said to have a “constructive residence in Australia”. That is, unless it can be proven that your permanent abode is outside of Australia and you have no plans to become an Australian resident. However, if you are already an Australian resident, this test does not apply, regardless of how long you’ve been living overseas.

Being certain of your tax residency makes filing your Australian tax return much simpler. For help understanding your obligations, call or email the experts at Expat Taxes today.

Photo: DSC00227 by Andrew_Writer licensed under Creative commons 4
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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia). Shane's passionate about tax and legitimate tax minimisation, tax-planning and structuring, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.
Shane Macfarlane
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