Key Takeaways 

• Australian tax residency is different from citizenship or visa status. 

• The ATO uses four main tests to determine individual tax residency. 

• The resides test looks at whether you live in Australia according to ordinary concepts. 

• The domicile test considers your Australian domicile and whether your permanent place of abode is outside Australia. 

• The 183-day test considers how long you are physically present in Australia, along with other circumstances. 

• A separate Commonwealth superannuation fund test applies to certain Australian Government employees and their families. 

• You do not necessarily become a tax resident simply because you spend more than 183 days in Australia. 

• Likewise, leaving Australia does not automatically mean you have stopped being an Australian tax resident. 

• Australian tax residency can affect whether foreign income needs to be reported in Australia. 

• Your circumstances should be assessed for each relevant income year. 

Main Text Content 

What Is Tax Residency in Australia? 

Tax residency is a status used to determine how Australian tax rules apply to you. 

It is important to understand that tax residency is not the same thing as immigration residency. 

For example, you may be: 

• An Australian citizen who is a foreign resident for tax purposes 

• A permanent resident who is an Australian tax resident 

• A temporary visa holder who is an Australian tax resident 

• A person living overseas who may still be an Australian tax resident depending on your circumstances 

The ATO states that you can be an Australian resident for tax purposes without being an Australian citizen or permanent resident. 

This is why checking your tax residency should involve looking at your actual circumstances rather than relying only on your passport or visa. 

Why Does Your Tax Residency Matter? 

Your tax residency can affect what income you need to report to the ATO. 

Australian residents for tax purposes generally need to declare their worldwide income in their Australian tax return, subject to the relevant rules and any applicable tax treaties or offsets. 

Foreign residents generally have different Australian tax obligations and generally report Australian-sourced income rather than their worldwide income. 

For example, an Australian resident who earns employment income, interest or investment income overseas may need to consider whether that income must be included in their Australian tax return. The ATO also provides rules for foreign income tax offsets where tax has already been paid overseas. 

This makes tax residency particularly important for Australians who move overseas, people who relocate to Australia, international workers and individuals with income or investments in more than one country. 

Australia Uses Four Main Tax Residency Tests 

The ATO identifies four tests for determining whether an individual is an Australian resident for tax purposes: 

• The resides test 

• The domicile test 

• The 183-day test 

• The Commonwealth superannuation fund test 

You are generally an Australian resident if you meet any one of these tests. 

This means you should not rely on just one factor, such as the number of days you spend in Australia. 

Your overall circumstances matter. 

The Resides Test 

The first test is commonly called the resides test. 

Under this test, you are considered an Australian resident if you reside in Australia according to ordinary concepts. 

The ATO considers factors such as: 

• How long you are physically present in Australia 

• Your intention and purpose 

• Family and business or employment connections 

• Your assets and where they are located 

• Your living arrangements 

• Your social and personal connections 

These factors are considered together rather than in isolation. 

For example, someone who moves to Australia and establishes their home, employment and regular living arrangements here may potentially be an Australian tax resident even if they have not been in Australia for a particular minimum number of days. 

The Domicile Test 

The second test is the domicile test. 

Under this test, you may be an Australian resident if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia. 

Domicile is a legal concept and can include a domicile of origin or a domicile of choice. 

However, having an Australian domicile does not automatically mean you remain an Australian tax resident when you move overseas. 

The ATO considers whether you have genuinely established a permanent place of abode outside Australia. 

Factors can include: 

• The length and continuity of your overseas stay 

• Whether you have established a home overseas 

• Whether you maintain a residence in Australia 

• Your family connections 

• Your financial and economic connections 

The ATO’s current ruling explains that there is no simple hard-and-fast rule for determining whether a person’s permanent place of abode is overseas. 

The 183-Day Test 

The 183-day test is one of the most commonly misunderstood residency tests. 

Generally, an individual may be considered an Australian resident under this test if they are physically present in Australia for more than half of the income year, continuously or intermittently. 

However, there is an important qualification. 

The test considers whether your usual place of abode is outside Australia and whether you intend to take up residency in Australia. 

Therefore, spending more than 183 days in Australia does not automatically make someone an Australian tax resident in every situation. 

The ATO notes that the 183-day test is generally relevant to people who were not previously Australian residents and entered Australia during the income year. 

For example, a person visiting Australia for an extended holiday may spend a substantial amount of time in the country without necessarily becoming an Australian tax resident simply because they crossed the 183-day threshold. 

The Commonwealth Superannuation Fund Test 

The fourth test is more specific. 

The Commonwealth superannuation fund test applies to certain Australian Government employees who are eligible to contribute to Commonwealth superannuation schemes. 

Under this test, certain eligible government employees can be treated as Australian residents for tax purposes regardless of other circumstances. 

The test can also apply to their spouse and children under 16 in the circumstances specified by the rules. 

For most Australians, this test will not be the primary consideration. 

How to Check Your Tax Residency Status 

If you are unsure about your tax residency, start by reviewing your circumstances for the relevant financial year. 

Consider: 

Where Do You Actually Live? 

Think about where you spend your normal day-to-day life. 

Do you have an established home in Australia? 

Or have you moved permanently or indefinitely to another country? 

Your physical location matters, but it is only one part of the overall assessment. 

What Was Your Intention? 

Consider why you were in Australia or why you left. 

For example: 

• Were you visiting temporarily? 

• Did you move to Australia for work? 

• Did you move overseas permanently? 

• Did you leave Australia for a fixed employment contract? 

• Did you plan to return to Australia? 

• Have your plans changed since leaving? 

Your intention can be relevant, although the ATO also considers your actual conduct and circumstances. 

Where Is Your Family? 

Family connections can be an important factor in determining residency. 

Consider where your spouse or partner and dependent children live and whether your family arrangements have changed. 

Family connections should not be viewed on their own, but they can contribute to the overall picture of where your life is based. 

Where Are Your Financial and Business Connections? 

Consider where you: 

• Work 

• Operate a business 

• Hold property 

• Maintain bank accounts 

• Have investments 

• Earn income 

• Conduct your professional activities 

Financial connections are one of the factors considered when assessing residency. 

Do You Have an Established Home Overseas? 

If you have moved outside Australia, consider whether you have established a genuine home overseas. 

The ATO looks at factors including the nature and permanence of your overseas living arrangements when considering the domicile test. 

Simply staying in different hotels or moving continuously between countries may not establish a permanent place of abode overseas. 

Keep Evidence of Your Circumstances 

If your residency position could be questioned, keeping appropriate records can help demonstrate your circumstances. 

Depending on your situation, relevant records may include: 

• Travel records 

• Visa information 

• Employment contracts 

• Rental or property documents 

• Evidence of your overseas accommodation 

• Australian accommodation records 

• Family arrangements 

• Employment records 

• Business records 

• Financial documents 

The purpose is not to collect paperwork unnecessarily. 

Rather, maintaining clear records can help explain where you lived, worked and maintained your personal and financial connections during the relevant income year. 

What Happens If You Move Overseas? 

Moving overseas does not automatically make you a foreign resident for Australian tax purposes. 

Your residency needs to be assessed based on your circumstances. 

For someone who has historically lived in Australia, the question may involve both the resides test and the domicile test. 

The ATO’s ruling explains that an Australian-domiciled person may cease to be an Australian resident where they have definitely abandoned Australian residency and commenced living permanently overseas, subject to the relevant circumstances. 

This is particularly important for Australians moving overseas for work. 

A person who leaves Australia for a short assignment and intends to return may have a different residency position from someone who permanently relocates their life overseas. 

What Happens If You Move to Australia? 

The reverse situation can also create questions. 

Someone arriving in Australia for employment, business, study or family reasons may need to determine whether they have become an Australian tax resident. 

The length of the stay is relevant, but it is not the only factor. 

Your living arrangements, intention, employment, family connections and other circumstances may all need to be considered. 

Someone arriving in Australia on a temporary visa should therefore not assume that their visa status automatically determines their tax residency. 

The ATO specifically notes that visa status and tax residency are separate considerations. 

Tax Residency Can Change 

Tax residency is not necessarily permanent. 

Your circumstances can change from one financial year to another. 

For example, you might: 

• Move from Australia to another country 

• Return to Australia after living overseas 

• Start or finish an overseas employment contract 

• Move your family overseas 

• Establish a permanent home in another country 

• Return to Australia permanently 

A residency assessment should therefore reflect the circumstances of the relevant income year rather than simply relying on what your status was in a previous year. 

What About Dual Tax Residency? 

It is possible for an individual to be considered a tax resident under the domestic rules of more than one country. 

This can create additional complexity. 

Australia has tax treaties with various countries, and treaty rules can sometimes affect which country has taxing rights or how residency is treated between the two countries. 

If you live and earn income across multiple countries, you should consider both Australia’s domestic tax rules and any applicable double tax agreement. 

Tax Residency and Australian Property 

Your tax residency can also be relevant when you own Australian assets. 

For example, foreign residents can have different Australian tax treatment when dealing with certain Australian property and capital gains. 

The ATO notes that tax residency can affect the application of capital gains tax rules, including rules involving Australian real estate and foreign residents. 

This is one reason Australians moving overseas should consider their tax position before leaving rather than only dealing with the issue when lodging their next tax return. 

Common Mistakes When Checking Tax Residency 

Assuming Citizenship Determines Tax Residency 

Being an Australian citizen does not automatically mean you are an Australian tax resident. 

Tax residency is determined under Australia’s tax rules and depends on your circumstances. 

Assuming 183 Days Is the Only Rule 

The 183-day test is only one of the residency tests. 

You need to consider the other applicable tests as well. 

Assuming a Visa Determines Your Tax Status 

Your visa may determine your immigration status, but it does not automatically determine your tax residency. 

Assuming Leaving Australia Automatically Ends Residency 

Moving overseas does not automatically end Australian tax residency. 

Your circumstances, intentions, and connections need to be considered. 

Ignoring Your Overseas Income 

If you are an Australian resident for tax purposes, your worldwide income may need to be considered in your Australian tax return. 

This can include income earned from employment, investments or other activities outside Australia, subject to the relevant rules. 

When Should You Get Professional Advice? 

Tax residency can become complicated when you have strong connections to both Australia and another country. 

Professional advice can be particularly useful if you: 

• Are permanently moving overseas 

• Have recently moved to Australia 

• Work across multiple countries 

• Own property in Australia while living overseas 

• Operate a business internationally 

• Receive foreign investment income 

• Have family living in different countries 

• Are unsure whether you are a resident or foreign resident 

• Are concerned about the tax consequences of changing residency 

A professional can review your circumstances and help you understand how the relevant Australian tax rules apply. 

How Sunnyside Financial Group Can Help 

Sunnyside Financial Group helps Australian individuals, families and businesses with accounting, taxation and financial planning matters. 

For individuals with international income, overseas employment, Australian investments or changing residency circumstances, understanding the tax implications can be important before making major financial decisions. 

SFG can help clients understand their Australian tax obligations and work through relevant tax planning and compliance considerations. 

The key is to assess your residency position based on your actual circumstances rather than relying on a single factor such as citizenship, visa status or the number of days spent in Australia. 

Final Thoughts 

Checking your Australian tax residency status is more than counting the number of days you spend in the country. 

The ATO uses four main tests: the resides test, domicile test, 183-day test and Commonwealth superannuation fund test. You may be considered an Australian resident if you satisfy one of the applicable tests. 

Your living arrangements, intentions, family connections, employment, assets, and financial ties can all be relevant. 

If you have recently moved to or from Australia, work internationally or maintain significant financial connections across countries, reviewing your tax residency can help you understand your Australian tax obligations and avoid mistakes when lodging your tax return. 

This article provides general information only and does not constitute personal tax or legal advice. Tax residency depends on individual circumstances, and Australian tax laws and international tax rules can change. If your circumstances involve international income, relocation, or multiple countries, consider obtaining professional advice.