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Australia Tax Residency Tests Guide

the Australian tax residency tests for the individuals. The guide covers: the resides test (the "ordinary concepts of the residency") — the "resides test" is the "primary test" for the Australian tax residency; the individual is the "Australian resident for the tax purposes" if the individual "resides in Australia" according to the "ordinary meaning"; the factors include: (a) the "physical presence in Australia" (the "the duration and the pattern of the presence"), (b) the "family and the social ties" (the "the spouse, the children, the extended family living in Australia"), (c) the "employment and the business ties" (the "the employment in Australia, the business location"), (d) the "living arrangements" (the "the home in Australia, the lease, the property ownership"), (e) the "assets and the investments" (the "the bank accounts, the superannuation, the investments in Australia"); the 183-day test (the "the statutory test") — the individual is the "Australian resident for the tax purposes" if the individual is "in Australia for more than 183 days" in the "income year" (the "whether the days are continuous or the intermittent"); the 183-day test is the "statutory test" — the individual who meets the 183-day test is the "resident unless the ATO is satisfied that the usual place of abode is outside Australia and the individual does not intend to take up the residence in Australia"; the domicile test (the "the common law test") — the individual is the "Australian resident" if the "domicile" (the "the permanent home") is in Australia, unless the ATO is satisfied that the "usual place of abode" is outside Australia; the "domicile of origin" is the "place of the birth" (the "the individual born in Australia has the Australian domicile"); the "domicile of choice" is the "place where the individual intends to live permanently or indefinitely"; the superannuation test (the "the superannuation-based test") — the individual who is the "member of the superannuation fund that is the regulated superannuation fund" (the "the Australian super fund") and the "fund is the complying superannuation fund" is the "Australian resident" for the tax purposes; the superannuation test is the "deeming provision" — the individual is deemed to be the "Australian resident" regardless of the physical presence; the temporary resident rules (the "the special rules for the temporary visa holders") — the individual holding the "temporary visa" (the "the student visa, the working holiday visa, the temporary skilled visa") is the "Australian resident for the tax purposes" (the "the individual pays the tax on the Australian-sourced income only") but is the "temporary resident" for the "CGT purposes" (the "the no CGT on the foreign assets").

Residency Factors and the ATO Guidance

  • Physical presence and the pattern: The "frequency and the regularity" of the visits to Australia. The individual who "travels frequently" to Australia for the "extended periods" may be the "resident" even if the individual does not meet the 183-day test. The "regular pattern" of the "annual visits" of the "3 to 4 months" each year may be the "indicative of the residency" if the "family, the home and the employment ties" are in Australia.
  • Family and the social ties: The "location of the spouse and the children" is the "most significant factor". The individual with the "spouse and the children living in Australia" is likely the "resident" even if the "individual works overseas". The "social ties" (the "the community involvement, the clubs, the memberships in Australia") support the "residency finding".
  • Employment and the business ties: The "employment in Australia" (the "the employer in Australia, the work location") is the "strong indicator of the residency". The "self-employed individual" with the "business in Australia" (the "the ABN, the business premises, the clients in Australia") is the "resident". The "overseas employment" with the "limited Australian ties" may support the "non-residency finding".

For the residency implications for the coming to Australia, see our Moving to Australia Guide →.

Residency Status and the Tax Implications

  • Resident tax treatment: The "Australian tax resident" pays the "tax on the worldwide income" (the "the Australian-sourced income" and the "the foreign-sourced income"). The "tax-free threshold" is available (the "$18,200"). The "Medicare levy" at the "2%" applies. The "50% CGT discount" is available. The "franking credits refund" is available. The "non-concessional contributions cap" at the "$120,000".
  • Non-resident tax treatment: The "non-resident" pays the "tax on the Australian-sourced income only". The "no tax-free threshold" (the "the tax at 32.5% from the first dollar up to $135,000"). The "no Medicare levy". The "no CGT discount" for the "assets acquired after the 8 May 2012". The "no franking credits refund" (the "the franking credits are not refundable to the non-residents"). The "withholding tax on the dividends" at the "15% to 30%" under the tax treaties.
  • Temporary resident treatment: The "temporary resident" (the "the individual holding the temporary visa") pays the "tax on the Australian-sourced income" — the "employment income" and the "business income" sourced in Australia. The "foreign-sourced income" (the "the dividends, the interest, the royalties, the rental income from the overseas") is "exempt from the Australian tax". The "CGT on the foreign assets" is "exempt" – the "the temporary resident pays the CGT on the Australian assets only".

For the non-resident tax rules and the withholding rates, see our Non-Resident Taxation Guide →.

Residency Checklist and the Practical Steps

  • Self-assessment checklist: The individual should assess the "residency status" at the "start of each income year" and at the "change in the circumstances". The key questions: (a) "Are you physically present in Australia for more than 183 days?", (b) "Do you have the home in Australia?", (c) "Is your family in Australia?", (d) "Do you have the employment in Australia?", (e) "Are you the member of the Australian super fund?", (f) "Do you intend to live in Australia permanently?", (g) "Do you hold the temporary visa?".
  • Residency change notification: The individual who "changes the residency status" (the "the resident becomes the non-resident" or the "non-resident becomes the resident") should: (a) "notify the ATO through the myGov or the tax agent", (b) "update the address in the myGov account", (c) "notify the super fund", (d) "update the TFN declaration with the employer", (e) "consider the CGT on the deemed disposal of the assets" (the "the CGT event I1 — the individual is treated as the disposing of the assets at the market value when becoming the non-resident").
  • Certificate of residency: The "Australian resident" who needs to "claim the tax treaty benefits" in the "foreign country" (the "the reduced withholding tax rates") can apply for the "Australian Certificate of Residency" from the ATO. The certificate confirms the "tax residency status" for the "specific period". The "treaty partner country" accepts the certificate as the "proof of the residency".

For the leaving Australia and the CGT on the departure, see our Leaving Australia Guide →.

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