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Australia Moving to Australia Tax Guide

Australian tax rules and obligations for the individuals moving to Australia. The guide covers: the residency tests — the 'residency status' determines the 'tax liability' for the individuals in Australia; the 'residency tests' include: (i) the '183-day rule' (the 'resides test' — the individual is the 'Australian resident' if the individual 'resides' in Australia, having regard to the 'physical presence', the 'intention', the 'family', the 'business ties', and the 'accommodation'), (ii) the 'domicile test' (the individual is the 'Australian resident' if the 'domicile' is in Australia — the 'domicile' is the 'place of permanent home' under the 'common law', unless the 'permanent place of abode' is outside Australia), (iii) the 'superannuation test' (the individual who is the 'member of the superannuation fund' in Australia is the 'Australian resident' if the fund is the 'Australian superannuation fund' under the 'SIS Act'); the tax rates for the new residents — the 'new residents' are subject to the 'Australian tax' on the 'Australian-source income' and the 'foreign-source income' (the 'foreign income' is generally taxable for the 'Australian residents' under the 'worldwide income taxation'); the TFN application — the 'Tax File Number' is the 'personal reference number' used by the ATO to track the 'tax returns' and the 'tax liabilities'; the new arrivals can apply for the 'TFN' through the 'ATO online' (the 'myGov' or the 'TFN application' for the 'individuals arriving in Australia'); the Medicare enrolment — the 'Medicare' is the 'public health insurance' in Australia; the 'Medicare levy' of 2% applies to the 'taxable income' of the 'Australian residents' (with the 'Medicare levy exemption' for the 'temporary residents' from the 'reciprocal health care agreement' countries (the 'RHCA' countries) — the 'UK', 'New Zealand', 'Ireland', 'Finland', 'Sweden', 'Norway', 'Italy', 'Malta', 'the Netherlands', 'Belgium', 'Slovenia'); the temporary resident tax treatment — the 'temporary residents' (the 'migrants' who hold the 'temporary visa' and do NOT have the 'Medicare entitlement' under the 'Reciprocal Health Care Agreement') are generally taxed as the 'Australian residents' on the 'Australian-source income' but are exempt from the 'CGT on the foreign assets' (the 'temporary resident CGT exemption' — the 'CGT on the assets that are NOT the 'taxable Australian property' is not applicable).

Residency Tests

  • Resides test: The 'resides test' asks whether the individual 'resides' in Australia — the factors include: the 'physical presence' (the 'days spent' in Australia), the 'intention' (the 'intent to remain' in Australia), the 'family ties' (the 'spouse', the 'children', the 'dependants'), the 'business ties' (the 'employment', the 'business operations'), and the 'accommodation' (the 'home' in Australia).
  • Domicile test: The 'domicile test' applies to the individuals who are NOT resident under the 'resides test'. The 'domicile' is in Australia if the individual's 'permanent home' is in Australia. The 'domicile of origin' is the 'father's domicile at birth'. The 'domicile of choice' is the 'domicile' acquired by the 'intention to make Australia the permanent home'.
  • 183-day rule: The '183-day rule' (the 'statutory test') provides that the individual is the 'Australian resident' if the individual is in Australia for 'more than one-half of the income year' (the '183 days' in the 'income year') — the exception is if the 'usual place of abode' is outside Australia and there is 'no intention to take up residence' in Australia.

For the CGT exemption for the temporary residents, see our Capital Gains Tax Guide →.

TFN & Medicare

  • Tax File Number (TFN): The 'TFN' is the 'personal reference number' for the 'tax system' in Australia. The new arrivals can apply for the 'TFN' online through the 'ATO' website (the 'TFN application for the individuals arriving in Australia'). The 'TFN' is required for the 'employment', the 'bank accounts', the 'superannuation', and the 'government payments'.
  • Medicare enrolment: The 'Medicare' enrolment entitles the individual to the 'public health services' in Australia. The 'Medicare levy' of 2% is charged on the 'taxable income'. The 'temporary residents' from the 'reciprocal health care agreement' countries (the 'UK', 'New Zealand', 'Ireland', 'Finland', 'Sweden', 'Norway', 'Italy', 'Malta', 'the Netherlands', 'Belgium', 'Slovenia') can apply for the 'Medicare levy exemption' (the 'Medicare levy exemption certificate' from the ATO).

For the Medicare levy and the surcharge details, see our Personal Tax Guide →.

Temporary Resident Tax Treatment

  • Taxation as resident: The 'temporary residents' are generally taxed as the 'Australian residents' on the 'Australian-source income' (the 'salary', the 'business income', the 'rental income') and the 'foreign-source income' that is 'attributable' to the 'Australian business' (the 'foreign branch income').
  • CGT exemption: The 'temporary residents' are NOT subject to the 'CGT on the foreign assets' (the 'CGT exemption' for the 'temporary residents' — the 'CGT on the assets that are NOT the 'taxable Australian property' is not applicable). The 'temporary resident CGT exemption' applies to the 'shares in the foreign companies', the 'foreign real estate', and the 'foreign assets'.
  • Superannuation: The 'temporary residents' can contribute to the 'superannuation' in Australia (the 'concessional contributions' at the 15% rate). The 'temporary residents' who leave Australia permanently can claim the 'DASP' (the 'departing Australia superannuation payment').

For the DASP and the leaving Australia procedures, see our Leaving Australia Guide →.