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Australia Non-Resident Taxation Guide

Australian non-resident taxation. The guide covers: the non-resident tax rates (the "non-resident tax rates") — the non-residents are taxed at the rates of: (a) 30% on the taxable income up to $135,000, (b) 37% on the income from $135,001 to $190,000, (c) 45% on the income above $190,000; the non-residents do NOT have the tax-free threshold (the "tax-free threshold of $18,200" does NOT apply to the non-residents); the non-residents are NOT subject to the Medicare levy (the "2% Medicare levy" does NOT apply); the non-residents are NOT eligible for the "Low Income Tax Offset" (the "LITO") or the "Senior and Pensioners Tax Offset" (the "SAPTO"); the tax residency rules (the "tax residency test") — the individual is the "Australian resident for the tax purposes" if: (a) the individual "resides" in Australia (the "ordinary concept test" — the "resides test"), OR (b) the individual "domicile" is in Australia (the "domicile test") — unless the "permanent place of abode" is outside Australia, OR (c) the individual is in Australia for 183 days or more in the income year (the "183-day test") — unless the "usual place of abode" is outside Australia and the individual does NOT intend to reside in Australia, OR (d) the individual is the "member of the superannuation scheme" for the Commonwealth public servants (the "superannuation test"); the temporary resident (the "temporary resident") — the "temporary resident" is the individual who holds the "temporary visa" (the "temporary visa" — the "student visa", the "working holiday visa", the "skilled worker visa", the "business visa"); the temporary residents are taxed at the "resident rates" (the "resident tax rates" with the tax-free threshold) but are NOT subject to the CGT on the "foreign assets" (the "CGT exemption for the temporary residents" — the temporary residents are NOT liable for the CGT on the disposal of the foreign assets acquired after 8 May 2012); the temporary residents are also NOT subject to the "Medicare levy"; the withholding taxes for the non-residents — the non-residents are subject to the withholding taxes on the Australian-sourced income: (a) the "dividend withholding tax" at 30% (reduced by the tax treaties), (b) the "interest withholding tax" at 10%, (c) the "royalty withholding tax" at 30% (reduced by the tax treaties); the CGT on the Australian property for the non-residents — the non-residents are subject to the CGT on the disposal of the "Australian real property" (the "Australian real property" — the "land and the buildings in Australia", the "mining rights", the "interests in the Australian real property entities" — the "shares in the Australian land-holding companies"); the non-residents do NOT benefit from the "main residence exemption" for the dwellings acquired after 1 July 2020; the non-residents are subject to the "CGT withholding" — the purchaser must withhold 15% of the sale price (or 12.5% for the properties below $750,000) and remit it to the ATO; the non-resident must obtain the "Clearance Certificate" (the "CGT withholding clearance certificate") from the ATO to avoid the withholding; the non-resident must lodge the "non-resident tax return" (the "non-resident tax return" — the form "Tax Return for the Non-Residents" or the "Individual Tax Return" with the "non-resident status") to report the Australian rental income and the capital gains. All amounts in Australian Dollars (AUD). For related reading, see our Cross-Border Tax Guide → and Property Tax Guide →.

Tax Residency Tests

  • Resides test: The individual "resides" in Australia if the individual has the "habitual residence" or the "usual place of abode" in Australia. The ATO considers: the "physical presence", the "frequency and the regularity of the visits", the "purpose of the stay", the "family and the business ties", the "maintenance of the dwelling in Australia".
  • 183-day test: The individual is the resident if the individual is in Australia for 183 days or more in the income year (the "physical presence test"). The individual can rebut the presumption if the "usual place of abode" is outside Australia and the individual does NOT intend to reside in Australia.
  • Domicile test: The individual is the resident if the "domicile" (the "permanent home") is in Australia, unless the ATO is satisfied that the "permanent place of abode" is outside Australia. The individual must demonstrate the "permanent relocation" outside Australia.

For the temporary resident CGT exemption and the foreign asset rules, see our Cross-Border Tax Guide →.

Non-Resident CGT Property

  • CGT on all Australian property: The non-residents are subject to the CGT on the disposal of the "Australian real property" (the "taxable Australian property" — the "TAP"). The non-residents are also subject to the CGT on the disposal of the "shares in the Australian land-holding entities" (the "indirect Australian real property interests"). The main residence exemption is NOT available for the dwellings acquired after 1 July 2020.
  • CGT withholding (15%): The purchaser must withhold 15% of the sale price (or 12.5% for the properties below $750,000) if the vendor does NOT provide the "Clearance Certificate". The withholding is remitted to the ATO. The non-resident must obtain the "Clearance Certificate" (the "CGT withholding clearance certificate") from the ATO before the settlement.

For the FIRB approval and the foreign resident stamp duty surcharges, see our Property Tax Guide →.