Most people who come to Australia for a working holiday or visit are not Australian residents for tax purposes. This includes people on subclass 417 or 462 visas (working holiday makers or backpackers).
This is because most working holiday makers (WHMs), consistent with their visa requirements, don't intend to stay in Australia. They only intend to have a holiday while working some of the time.
Working out residency for tax purposes involves looking at your purpose for being in Australia, your way of life in Australia and whether you have a home in another country.
When you prepare your Australian tax return, you must indicate whether you're an Australian resident for tax purposes or a foreign resident for tax purposes.
To be an Australian resident for tax purposes you must meet one of the following:
- You're able to show that your living and working arrangements are consistent with making Australia your home – see the resides test.
- You live in Australia for more than 183 days in an Australian income tax year, can prove that you intend to remain in Australia long-term or permanently, or don't usually live outside of Australia – see the 183-day test.
See Factors to consider for what we look at when determining residency status for tax purposes.
Tax residency scenarios
The Commissioner's longstanding view is that WHMs are foreign residents.
Most people who hold working and holiday visas, consistent with their visa requirements, don't intend to stay in Australia. They only intend to have a holiday in Australia and work some of the time before returning home once they have finished travelling. They are visitors and therefore not residents. See examples 1, 2 and 3.
You may be an Australian resident if your purpose for being in Australia changes and your behaviour is consistent with no longer being a visitor. For example, you may apply for a permanent visa, decide to purchase a home or take up a long term lease and develop routines associated with your work and social arrangements. If this occurs, you may become an Australian resident for tax purposes at the time your behaviour changes. See examples 4 and 5.
Example 1: Typical single working holiday maker
Roberto lives in Italy with his parents and comes to Australia on a 417 Working Holiday visa for 12 months. Roberto intends to work while on holiday in Australia. While Roberto travels to Australia, his possessions remain at his parents’ home in Italy. He also prepays his subscription to a soccer club in Italy to retain his membership for the next 12 months. He intends to return to his parents’ place when he returns from his holiday.
Roberto initially works for 4 weeks in his uncle’s cafe in Docklands and stays with him in North Carlton rent free. On his days off Roberto spends his time seeing the tourist spots in Victoria. Roberto then travels around Australia on holiday for the next 2 months.
For the next 3 months, Roberto works in Regional Victoria and stays in shared accommodation. Roberto returns to live and work with his uncle for a further 3 months and seeks an extension of his 12-month visa in order to continue his holiday around Australia and buys a car for this purpose.
He stays in Sydney for approximately 2 months and works as a waiter. During this time, he stays with friends in share accommodation. For the next 2 months, he travels by car around New South Wales and Queensland and stays in various hostels.
He then sells his car and leaves Australia to travel to Fiji and New Zealand for a month. He returns to Melbourne to stay with his uncle for several weeks and then departs Australia to return to his parents’ home in Italy.
Decision: Foreign resident
While Roberto stayed in Australia for 17 months, his behaviour showed he was a visitor. His main purpose was to have a holiday in Australia and fund that through casual and intermittent work. While he was in Australia, he didn't treat any place as if it were his ‘home’, or as distinct from any other place where someone might stay while on holiday.
His return home to Italy where he lived before his visit, keeping possessions at his parents’ home and prepaying his soccer membership also show his home is outside of Australia.End of example
Example 2: Typical working holiday maker travelling to Australia with friends
Erin, a social worker, and her boyfriend, Sean, who has just completed his law degree, come to Australia from the Republic of Ireland on a 417 Working Holiday visa for 12 months. Erin and Sean met in Dublin while they were studying at University College Dublin.
Sean comes from Limerick, while Erin is Dublin born. Sean, while studying, stayed on campus and regularly returned to his home in Limerick during the breaks. Erin lived at her parents’ home in Dublin while attending university. While Erin and Sean travel to Australia their possessions remain at their respective parents’ homes in Ireland.
Erin and Sean are enjoying a gap year before they commence work in Ireland, and they intend to travel and work around Australia. They arrive in Brisbane to stay at a hostel and join a group of backpackers that work around Queensland. During this time, they work in several remote areas to pick fruit, staying in connected share accommodation.
They decide to stay longer and qualify for the 12-month extension on their visa. For the next 12 months, they decide to spend more time in Sydney, Brisbane and Cairns to extend their Australian adventure.
For the first 6 months, they stay in Sydney, renting an apartment for 6 months and working casually in a bar. During this time, they enjoy the beach lifestyle in Sydney and take trips up and down the coast with the aim of seeing as many of the NSW beaches as possible.
For the next 6 months, they stay in hostels in Brisbane and Cairns as well as camp in National Parks. During this time, they work casually in bars for a few weeks at a time to fund their travels.
Erin and Sean return to their parents’ homes in Ireland.
Decision: Foreign resident
Erin and Sean in the first year are travelling and working in Australia. In the second year, they take out a 6-month lease and work for the same employer for 6 months (both factors which some people consider is all that is required to be an Australian resident). However, residency for tax purposes also depends on other factors and their behaviour during this time is still consistent with being a visitor.End of example
Example 3: Working holiday maker who decides to extend stay
Yangsook lives in the Republic of Korea and comes to Australia on a 417 Working Holiday visa for 12 months. Yangsook intends to work while on holiday in Australia.
While Yangsook travels to Australia her possessions remain at her father’s home in the Republic of Korea. Before her visit to Australia, she enrols at Korea University and defers her start by 12 months.
For the first 3 months, Yangsook stays in 14 different hostels as she travels around New South Wales and Queensland.
For the next 6 months in Australia, she works in far north Queensland fruit picking on several different farms and lives in the shared accommodation provided by the farms. During this time she has a few dates with John, the son of a farmer and they agree to keep in contact after she continues on with her travels.
She leaves Queensland to spend 14 days in Fiji and returns to Sydney to stay with a friend in shared accommodation, but soon returns to John’s place.
Yangsook and John fall in love and want to keep seeing each other. Yangsook applies to extend her 417 Working Holiday visa for another 12 months and live with John’s family. Yangsook obtains work as a waitress in a local cafe. On her days off she does chores around the farm and spends time with John.
Decision: Foreign resident
Yangsook's behaviour is consistent with that of a visitor.
Although Yangsook has changed her behaviour to develop strong family ties in Australia, as well as habits and routines consistent with making Australia her home. Yangsook still has a place deferred in a foreign university, which indicates she intends to leave Australia. Also, she has not applied for any alternative visa to allow her to stay long-term.End of example
Example 4: Working holiday maker who gets sponsored to stay
Bjorn, a computer programmer from Sweden, comes to Australia on a 12-month 417 Working Holiday visa. Upon arrival Bjorn finds shared accommodation for a period of 2 months (61 days). During that 61-day period, Bjorn works as a barista at a local cafe.
Bjorn decides to travel to Perth to explore the city and spends 19 days there. Bjorn then arranges a 21-day holiday to Fiji and returns to Australia. On his return, Bjorn finds shared accommodation and recommences working in a different cafe for 2 months (61 days). Bjorn then goes on a 30-day holiday in New Zealand.
After that holiday, Bjorn returns to Australia, goes back to the shared accommodation and gets a job as a computer programmer, still intending to return to Sweden.
He enjoys Australia and the new job. His employer is short-staffed and desperate to keep Bjorn, so he asks Bjorn if he will stay if he gets approval to sponsor him under the Employer Nomination Scheme. His employer gets approval and Bjorn is advised his visa is approved and he signs a contract for 12 months.
Bjorn is a foreign resident during his stay on holiday.
He is a resident from when he commits to stay under the Employer Nomination Scheme.End of example
Example 5: New Zealander who decides to stay indefinitely
Matt arrives in Australia from New Zealand on a special category visa that allows him to remain indefinitely in Australia and to work in Australia. Matt is unsure whether he will settle in Australia permanently. Matt maintains his home and other assets in New Zealand.
Once Matt arrives in Australia, he decides he will holiday around Australia to determine where he may live and takes up various short-term work opportunities.
Matt rents shared accommodation while exploring Australia and permanent work opportunities. Matt finds permanent employment in Brisbane.
As a result, Matt sells his home and other physical assets in New Zealand and transfers his financial assets to Australia. He rents a house in Brisbane and has his furniture and personal items shipped across from New Zealand.
Matt is a foreign resident during his stay on holiday.
He is a resident from when his intention and behaviours changed to live in Australia.
Matt is a foreign resident until he made his decision to relocate to Australia. At that time, he became a resident, as that is when his intention changed. From this time, he intended to live in Australia and his behaviour (selling his home and setting up a home in Brisbane) is consistent with residing in Australia.End of example
If you're here for a working holiday or visiting and working during your stay, there are 2 main factors we use to work out if you're an Australian resident:
- your purpose for being in Australia
- you will not be a resident if you're in Australia for a holiday even if you work while here to support that holiday
- you may be a resident if your purpose was to stay on a more permanent basis (for example, you used the WHM visa as a pathway to a spouse visa or skilled working visa)
- how you actually live – for example
- your living arrangements – have you purchased or leased a place to live in Australia? (This is different from leasing a place while you're on holiday and working as you need.)
- your connections in the Australian community – have you joined a local club or group to be part of the local community, such as a sports team where you're expected to be regularly involved? (This is different to joining a local club or group to meet locals and other travellers or to access cheap meals or gym facilities.)
- where your personal assets are located – do you have personal assets such as an investment or term deposit account, a car and household items (not just a car to use for travelling around Australia or cheap furniture to furnish temporary accommodation), or any other asset that is needed for long term residence in Australia?
- whether you have strong family ties in Australia – do you have a close relationship with a person who lives in Australia and are you in Australia to support or live with them? (This is different from visiting family in Australia or travelling around Australia with your girlfriend or boyfriend on holiday.)
No one factor will determine whether you're an Australian resident. All of your circumstances are taken into account.
Factors consistent with being an Australian resident
- You have physically been in Australia for an extended period, usually longer than 6 months
- You have established a home in Australia
- You don't have a home overseas
- You’ve established close community or family ties
- You’ve invested in long term assets in Australia
- You have an intention to stay in Australia
- Your behaviour and connection to Australia support your intention to stay in Australia
- You're not a tourist or a visitor
Factors consistent with being a foreign resident
- Your primary purpose for being in Australia is to have a holiday, to experience and see Australia
- You have no fixed intention to stay in Australia beyond your holiday and have taken no steps to permit you to stay in Australia beyond your holiday
- You have arrangements in place so that you can return to the location you were living when you leave Australia – for example, your assets are in storage in your home location
- You have study or employment to return to when you leave Australia or your plans are to return to study/take up employment on your return
- You continue to maintain connections to the following in your home location whilst in Australia
- family and friends
- clubs, sports or community associations
- professional qualifications, association memberships and registrations
- social connections
For more information on residency, see:This information will help you work out if you are a resident while on a working holiday in Australia.