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  • Your tax residency

    If you are coming to Australia or going overseas, you may need to work out your residency for tax purposes. You can use the residency tests to work out if you're:

    We don't use the same rules as the Department of Home Affairs (formerly known as the Department of Immigration and Border Protection). This means you:

    • can be an Australian resident for tax purposes without being an Australian citizen or permanent resident
    • may have a visa to enter Australia but are not an Australian resident for tax purposes.

    For a summary of key information about residency status, download Residency for tax purposes (PDF, 1.03MB)This link will download a file.

    On this page:

    Residency tests

    There are statutory tests to determine your residency:

    You can also use our Work out your residency status for tax purposes tool to help work out your residency.

    Resides test

    The primary test of tax residency is called the resides test. If you reside in Australia, you are considered an Australian resident for tax purposes and you don't need to apply any of the other residency tests.

    Some of the factors that can be used to determine residency status include:

    • physical presence
    • intention and purpose
    • family
    • business or employment ties
    • maintenance and location of assets
    • social and living arrangements.

    If you don't satisfy the resides test, you'll still be considered an Australian resident if you satisfy one of three statutory tests.

    Domicile test

    You're an Australian resident if your domicile (the place that is your permanent home) is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.

    A domicile is a place that is considered to be your permanent home by law. For example, it may be a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

    Find out about:

    183-day test

    This test only applies to individuals arriving in Australia. You will be a resident under this test if you're actually present in Australia for more than half the income year, whether continuously or with breaks.

    Find out about:

    The Commonwealth superannuation test

    This test applies to Australian Government employees working at Australian posts overseas and who are members of the CSS or PSS schemes. It does not apply to members of the PSSAP scheme. If this is the case, you (and your spouse and children under 16) are considered to be a resident of Australia regardless of any other factors.

    Find out about:

    Example: Australian resident under the domicile test

    Emily leaves Australia to work in Japan as a teacher of English. Emily has a one-year contract after which she plans to tour China and other parts of Asia before returning to Australia to continue work here.

    Emily lives with a family in Japan during her time there and rents out her property in Australia. Emily is single. Her parents live interstate and her brother has moved to France. Emily is an Australian resident for tax purposes even though she is residing in Japan because, under the domicile test:

    • her domicile is in Australia (as she is a resident who has lived in Australia and will generally retain a domicile here when absent overseas), unless she chooses to permanently migrate to another country)
    • her permanent place of abode remains Australia.
    End of example

     

    Example: Foreign resident for tax purposes

    Bronwyn, an Australian resident, receives a job offer to work overseas for three years, with an option to extend for another three years. Bronwyn, her husband and three children decide to make the move.

    They rent out their house in Australia as they intend to return one day. While overseas they rent a house with an accommodation allowance provided under Bronwyn's contract.

    Bronwyn is unsure if she will extend her contract to stay for another three years. She will decide later depending on how the family like life.

    Bronwyn is considered a foreign resident for tax purposes because she does not satisfy 'the resides' test. This is due to:

    • the length of her physical absence from Australia
    • other circumstances not being consistent with residing in Australia, even though she has retained the family home – such as
      • establishing a home overseas with her family
      • renting out her family home in Australia.
       

    Bronwyn has also not satisfied the domicile test, as:

    • her permanent place of abode is outside Australia due to
      • the length of time committed to being overseas
      • the establishment of a home overseas
      • her family going with her overseas
       
    • the fact that she won't be selling the family home in Australia, although relevant, is not persuasive enough to overcome the finding on the basis of the other factors
    • it can be argued that she has abandoned her home in Australia for the duration of her stay, by renting it out.
    End of example

    Failure to cut connection with Australia

    A legal decisionExternal Link in 2013 shows that a person who fails to cut their connection with Australia will be treated as an Australian resident.

    See also:

    If your residency status changes during the year

    If your status has changed from resident to foreign resident during the income year, answer 'yes' to the question 'Are you an Australian resident?' on your tax return.

    This ensures you are taxed at resident rates for the income year. You are entitled to a pro-rata tax-free threshold for the number of months you are an Australian resident.

    To claim a tax offset for a dependent spouse, you must both be Australian residents for tax purposes. You will need to reduce your claim to take into account the period you were both foreign residents.

    Foreign residents do not have to pay the Medicare levy. In your tax return you can claim the number of days in the income year that you are not an Australian resident as exempt days.

    From the date you cease to be an Australian resident, there is no need to show your foreign-source income in your tax return. Also, all Australian-sourced interest, dividends and royalties you received after you ceased to be an Australian resident are subject to the withholding tax provisions as a final tax. They should not be included in your tax return.

    If you have a HELP or TSL debt you'll need to include these amounts as they are used to work out your worldwide income and your repayment obligations against these debts.

    See also:

    Last modified: 23 Mar 2021QC 59296