• Some examples of Australian residents and foreign residents

    Within this publication foreign resident is the same as non-resident.

    We have outlined a number of scenarios that may help you to determine whether you are an Australian resident or a foreign resident for income tax purposes.

    Simon - a new migrant who changed his mind

    Facts

    Simon migrated from England to Australia with his family on a permanent resident's visa.

    Shortly after arriving in Sydney, he bought a house and secured a job with an accounting firm.

    The children went to a local private school while his wife took up various leisure activities similar to those that she had been engaged in overseas.

    Simon still owned an overseas property which the family lived in before migrating to Australia.

    Four months after arriving, the family decided that they were unhappy here and returned to England for good.

    At the time of departure they were still British citizens, as they did not stay in Australia long enough to qualify for citizenship - even if they had wanted to be naturalised.

    Outcome: why is Simon considered an Australian resident?

    Although Simon and his family were in Australia for only four months, they are considered Australian residents on the basis that they were residing here for the duration of their stay. This is despite the fact that Simon owned a family home overseas during that period.

    Their intention of residing permanently in Australia was obvious through their actions of:

    • obtaining a permanent resident's visa
    • Simon getting a job
    • the children going to school
    • his wife engaging in activities that were similar to previous ones
    • their purchasing a home and treating it as such.

    Although the family was not physically present in Australia for long, they were displaying behaviour consistent with residing here from the moment they arrived.

    Note: These factors allow the family to satisfy the residency test. Therefore, it's not necessary to consider the statutory tests. The fact that they are British citizens all along is irrelevant in arriving at the decision.

    Emily - teaching in Japan

    Facts

    Emily leaves Australia to work in Japan as a teacher of English.

    She has a one-year contract, after which she plans to tour China and other parts of Asia before returning to Australia to resume work here.

    During her time in Japan, she lives with a family who treat her as one of their own.

    She rents out her property in Australia during her absence.

    Emily is single. Her parents live interstate, and her brother has moved to France.

    Outcome: why is Emily considered an Australian resident?

    Even though Emily is residing in Japan, under the domicile test:

    • her domicile is in Australia (a resident who has always lived in Australia will generally retain a domicile here when they are absent overseas, unless they choose to permanently migrate to another country)
    • her permanent place of abode remains in Australia.

    Gerhardt - a new migrant who hasn't quite left his old country

    Facts

    Gerhardt migrated from Sweden to Australia with his family.

    He had to return to Sweden to see out a performance contract that had two years to go.

    He departed one month after arriving and settling the family here.

    In Sweden he stayed in the family house that they had been living in before moving to Australia.

    He also retained the family car so that he could travel around for his work in Sweden.

    He used to play tennis with a local club in Sweden and, on his return, resumed his association with the club.

    Although he intends to join his family in Australia for good at the end of his contract, he is leaving his options open in case he is able to secure another contract.

    In the nine months that he has been back in Sweden, he has only visited his family in Australia once.

    Outcome: why is Gerhardt considered a foreign resident?

    From the above facts, Gerhardt is a foreign resident for income tax purposes.

    The following table outlines the reasons why the four residency tests were not satisfied.

    Test

    This test is not satisfied because...

    Residency - the resides test

    • although he has a residential home in Australia and his family resides here, these factors are not significant enough
    • he is not physically present in Australia for a considerable period of the income year, and
    • he intended to return to Sweden after a short stay in Australia for the purpose of settling his family.
     

    Residency - the domicile test

    • he has not conclusively demonstrated that his domicile of choice is in Australia
    • Gerhardt's circumstances indicate that he has a permanent place of abode in Sweden
    • his intention of joining his family for good after completion of his contract is also not conclusive, as his actions indicate that his absence from Australia is indefinite, and
    • his single visit to Australia in the nine months also adds weight to the conclusion drawn.
     

    Residency - the 183 day test

    he was in Australia for only one month.

    Residency - the superannuation test

    this does not apply in Gerhardt's circumstances.

    Bronwyn - an extended job overseas

    Facts

    Bronwyn, an Australian resident, has received a job offer to work overseas for three years, with the option to extend for another three years.

    Bronwyn, her husband and three children decide to make the move.

    They retain their property in Australia, as they intend to return one day.

    The house will be rented out during their absence.

    Bronwyn is uncertain whether she will extend the option to stay after three years, and will decide later, depending on how the family like the life there.

    While overseas, they will rent a house with an accommodation allowance provided under her contract.

    Outcome: why is Bronwyn considered a foreign resident?

    The following table outlines the reasons why the four residency tests were not satisfied.

    Test

    This test is not satisfied because...

    Residency - the resides test

    the length of Bronwyn's physical absence from Australia and the surrounding circumstances (such as establishing a home overseas with her family and renting out her family home in Australia) are not consistent with residing in Australia, even though she has retained the family home in Australia.

    Residency - the domicile test

    • her permanent place of abode is outside Australia due to
      • the length of time she has committed to spending overseas
      • establishment of a home overseas, and
      • her family accompanying her
       
    • the fact that she will not be selling the home in Australia, although relevant, is not persuasive enough to overcome the finding on the basis of the other factors
    • it is arguable that she has abandoned her home in Australia for the duration of her stay, by renting it out.
     

    Residency - the 183 day test

    this does not apply from the date of her departure for overseas.

    Residency - the superannuation test

    this does not apply.

    Kate - a visitor, working and living in one place

    Facts

    Kate is from Ireland and entered Australia on a working holiday visa in July 2004. She intended to, and did in fact, stay in Sydney for most of the twelve months she was in Australia. Kate is close to her brother who has migrated to Australia and lives in Sydney.

    Kate had one ten day holiday travelling up the east coast just after arriving in Sydney, and another two week holiday at Byron Bay in January 2005. She spent the last three weeks of her stay in Australia travelling around Western Australia.

    Kate lived in share accommodation at one location for four weeks in Sydney and share accommodation at another location in Sydney for ten months. Kate's name was put on the lease and she made a part contribution to the bond. She also purchased her bed, other bedroom furniture and a fridge.

    Kate worked in coffee shops and restaurants throughout the whole period she was in Sydney. Kate joined a library, the Irish club and a water polo club while staying in Sydney.

    Outcome: why is Kate an Australian resident?

    Kate's intention was to reside and live in one location. Kate's behaviour and abode for 11 out of the 12 months exhibited the attributes of a place of residence as contrasted with overnight, weekly, monthly or transitory accommodation of a traveller. By living and working in close proximity to her brother and establishing links in the community by joining the local library and membership of two local clubs, Kate demonstrated her family and social ties.

    Kate's behaviour during the time spent in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.

    Janine - combining work and travel

    Facts

    Janine is a British national who has longed to spend twelve months 'down under'. After saving for years, she takes twelve months leave from her work and departs for Australia on her twenty-fourth birthday. Although she travels with considerable savings, her intention is to spend at least part of her time working. She has obtained a working holiday visa enabling her to work for no more than six months with one employer.

    Through a contact in Australia, she is assured of work in Perth for the first three months. After that period, she decides to travel to the east coast via Adelaide. She spends a month in Adelaide where she works for two weeks and continues her journey to Melbourne.

    Once there, she meets some friends from back home. After working for a further three months, she decides to spend the balance of her time in Melbourne and uses her savings for living expenses. To keep costs down, she leases a house with two other friends. At the end of her twelve months in Australia, she returns to the United Kingdom and resumes living in her house there, which she had been renting out while in Australia.

    Outcome: why is Janine a foreign resident?

    Although Janine obtains work, by travelling from place to place she has not established a pattern of habitual behaviour, even though she is physically present in Australia for twelve months and she co-leases a house. Janine's main purpose for being here is to have a holiday and she is merely supplementing her savings by working. Janine also fails to meet the 183 day test because she had a usual place of abode outside Australia and did not intend taking up residence in Australia.

    Carleene - a visitor in search of work

    Facts

    Carleene is a 22 year old New Zealand resident who has graduated from university with a major in journalism. She decides to travel to Australia in the hope of finding suitable work. Although she has no firm intentions on arrival, she would like to stay in the country for 'a while', particularly if the right job comes along.

    After three months in Australia with only casual employment as a waitress, Carleene returns to New Zealand, having been unsuccessful in finding suitable employment as a journalist.

    Outcome: why is Carleene a foreign resident?

    Carleene's stay is not sufficient to establish a pattern of habitual behaviour. On arrival, she is uncertain about her stay and has no other ties here. This conclusion would be further strengthened if she travelled to various cities in search of employment.

    What to read/do next

    For more general information about residency, read Work out your residency status for tax purposes.

    For information on the four residency tests, read:

    Other information about residency:

      Last modified: 13 Apr 2017QC 17141