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  • Work out your residency status for tax purposes

    To understand your tax situation, you first need to work out if you are an Australian or foreign resident for tax purposes.

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

    Work out your residency status

    As an individual you will fit into one of the following three categories:

    There are separate rules for working holiday makers and individuals who are tax residents of more than one country.

    The easiest way to work out your tax residency is with our calculators. If you are in Australia for:

    If you have been living in Australia and have left or intend to leave, see Determination of residency status – leaving AustraliaThis link opens in a new window.

    Residency tests

    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.

    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 (broadly, 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).

    A permanent place of abode should have a degree of permanence and can be contrasted with a temporary or transitory place of abode.

    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.

    You may be said to have a constructive residence in Australia, unless it can be established that your usual place of abode is outside Australia and you have no intention of taking up residence here.

    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.

    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 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)
    • 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.

    The 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 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
    • the surrounding circumstances not being consistent with residing in Australia (such as, establishing a home overseas with her family and renting out her family home in Australia) even though she has retained the family home.

    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 accompanying 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

    See also:

    Common tax residency situations

    We've listed some common residency and tax situations below.

    Tax residency can also depend on whether the country you are going to or coming from has a tax treaty with AustraliaExternal Link, so check this also.

    Are you a resident for tax purposes?

    If you…:

    you are generally:

    leave Australia temporarily and do not set up a permanent home in another country

    an Australian resident for tax purposes

    are an overseas student enrolled in a course that is more than six months long at an Australian institution

    an Australian resident for tax purposes

    are visiting Australia, working and living in the one location and have taken steps to make Australia your home

    an Australian resident for tax purposes

    are visiting Australia and for most of that time you are travelling and working in various locations around Australia

    a foreign resident for tax purposes

    are either holidaying in Australia or visiting for less than six months

    a foreign resident for tax purposes

    migrate to Australia and intend to reside here permanently

    an Australian resident for tax purposes

    leave Australia permanently

    treated as a foreign resident for tax purposes from the date of your departure

    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.

    Residency and tax categories

    Foreign residents

    If you're a foreign resident for tax purposes you must declare on your tax return any income earned in Australia, including:

    • employment income
    • rental income
    • Australian pensions and annuities
    • capital gains on Australian assets.

    As a foreign resident:

    • you have no tax-free threshold
    • you do not pay the Medicare levy
    • the capital gain on your Australian home may need to be included if you are a foreign resident at the time you sign the contract of sale

    If you have a Higher Education Loan Program (HELP) or Trade Support Loan (TSL) debt you'll need to declare your worldwide income or lodge a non-lodgment advice. You can do this using our online services via myGov or through a registered Australian tax agent. For more information, see HELP and TSL overseas obligations. The Study and training loan repayment calculator will help you find out your compulsory repayment or overseas levy amounts.

    To work out if you need to lodge, use our Do I need to lodge a tax return tool.

    Australian resident for tax purposes

    If you're an Australian resident for tax purposes, you have to declare all income you earned both in Australia and internationally on your Australian tax return.

    A foreign income tax offset is generally available to reduce the Australian tax on the same income.

    Temporary residents

    If you have a temporary visa, and neither you or your spouse is an Australian resident within the meaning of the Social Security Act 1991 (that is, not an Australian citizen or permanent resident), you're a temporary resident. This means you only declare income you derived in Australia, plus any income you earn from employment performed overseas for short periods while you are a temporary resident of Australia.

    Other foreign income and capital gains don't have to be declared.

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    See also:

    Last modified: 26 Feb 2019QC 33232