If you live in Australia you need to fill in a tax return to declare all of the income you've earned over the past year. One of the first questions you'll find on your tax return is whether or not you're an "Australian resident for tax purposes". The important thing to note here is that your tax status as a resident is not the same as your immigration status as a resident.
Here, we explain how to work out whether you're an Australian resident for tax purposes and what it means for your tax return.
The Australian Taxation Office (ATO) uses a few different tests to assess whether an individual is an Australian resident for tax purposes. (Note: This not only includes assessing foreigners as tax residents, but also whether Australian citizens count as tax residents.)
If you don't satisfy the "resides" test, you'll need to satisfy one of the following tests to be considered a resident for tax purposes:
The ATO guidelines explain situations when you will qualify as an Australian resident for tax purposes. Check out the table below for some common examples:
| Example | Australian resident | Reason |
|---|---|---|
| Leave Australia temporarily and do not rent or buy a home overseas | Yes | Primary place of residence is Australia |
| Leave Australia permanently | No | Australia is no longer primary place of residence |
| Visiting Australia for more than 6 months and spend most of your time in the one place | Yes | Behaviour of a resident |
| Visiting Australia for more than 6 months and spend your time in multiple locations | No | Behaviour of a traveller |
| Studying at an Australian institution for more than 6 months | Yes | Behaviour of a resident |
| Response | WA | VIC | SA | QLD | NSW |
|---|---|---|---|---|---|
| I do it myself | 38.14% | 39.93% | 38.67% | 49.78% | 44.44% |
| I use an accountant | 38.14% | 38.57% | 34.67% | 28.57% | 35.33% |
| I don't file taxes | 12.71% | 16.04% | 17.33% | 14.72% | 11.4% |
| I use a specialist service (eg. HR Block) | 7.63% | 3.41% | 8% | 3.03% | 5.13% |
| A family member or friend does it on my behalf | 3.39% | 2.05% | 1.33% | 3.46% | 3.42% |
| Other | 0.43% | 0.28% |
Check out the marginal tax rates that apply to Australian residents for the 2022-23 financial year below:
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
If you're a foreign resident working in Australia:
Make sure you take a look at the ATO website to discover the marginal tax rate that applies to the income you earn. The foreign resident tax rates for 2022-23 are shown in the table below:
| Taxable income | Tax on this income |
|---|---|
| 0 – $120,000 | 32.5 cents for each $1 |
| $120,001 – $180,000 | $39,000 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $61,200 plus 45 cents for each $1 over $180,000 |
If you're a foreign resident for tax purposes, you can't declare foreign income on your Australian tax return.
To help you answer this question, let's take a look at a couple of fictional examples.
Let's say Michael has left Australia to work for a UK-based accounting firm on a 3-year contract. He doesn't own his home in Australia and he plans on renting an apartment in London, returning home to visit Australia no more than once a year.
Under the 4 residency tests listed above, Michael is considered a foreign resident for tax purposes. As such, Michael only has to declare any income earned in Australia to the ATO. As he did not work in Australia and didn't earn any income in Australia during the past financial year, he is not required to complete a tax return.
* This is a fictional, but realistic, example.
It can be difficult to determine your residency status if you don’t know how long you will be out of the country. If you’re emigrating to live permanently in another country, you’re subject to foreign tax laws and you will not need to lodge an Australian tax return. However, if you’re only planning on working overseas for a year and you’re staying with friends, you’re still an Australian resident for tax purposes.
The ATO website has a handy tool you can use if you’re leaving the country to calculate your residency status.
For the first 9 months of his stay, Hamish travels around the country visiting major tourist attractions. He does odd jobs and takes up short-term employment along the way to help fund his travels, but has no concrete plans about where he wants to settle. During this holiday period, Hamish is considered a foreign resident for tax purposes.
However, when Hamish finds a job in Melbourne and decides he wants to settle there permanently, he sells his home and assets in New Zealand. As his intention has changed and he now wants to live in Australia, and his behaviour (selling his property in New Zealand and buying an apartment in Melbourne) is consistent with residing in Australia, Hamish then becomes an Australian resident for tax purposes.
* This is a fictional, but realistic, example.
For many on temporary working holiday visas it can be confusing to know whether you count yourself as a resident for tax purposes. The answer is it really depends on your lifestyle while you're in Australia.
If you're moving around every few weeks working in temporary or casual jobs as you travel and your existing plan is to leave Australia after the first year, you are considered a foreign resident for tax purposes.
If you're working but have based yourself in one location and you are planning on extending your visa so you can stay in Australia for a longer term, you may be an Australian resident for tax purposes. Factors such as whether you live in a rented apartment or share house and whether you shop at the same supermarket each week can contribute to you being considered an Australian resident for tax purposes.
In some cases, determining your residency status for tax purposes can be quite complicated. If you have any questions about your personal situation, it’s best to contact the ATO for specific information. You can contact the ATO on 13 28 61 from 8am to 8pm Monday to Friday and 10am to 4pm Saturday.
You might also like to consider paying a tax agent to complete your tax return for you. They can assess your personal situation and ensure your tax return is completed accurately and properly lodged with the ATO. For help choosing an online tax agent who can assist you no matter where you're based, consult our table below. Or visit our city guides to find a tax agent near you.
Lodging your tax return yourself online via myGov is free, but a professional tax agent can help you maximise your refund and save you time.
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I entered Australia on a prospective spouse visa on the 6 May 2024. We will be married on the 30 June 2024. I intend to live permanently in Australia with my husband. We have signed a 12 month lease on a property, and have a joint bank account. As soon as we are able we will apply for a partner visa. I am seeking employment and need to know if I am a resident for taxation purposes.
Hi there,
In short, yes, you are a resident for taxation purposes.
The way one would judge whether they’re a resident for taxation purposes is about the way they live and interact in Australia, rather than it being defined to a visa, for example. Considering you have a 12 month lease and presumably do things like grocery shopping at a particular store and you’re settling into a specific area, yes, you are a resident for tax purposes. This is unlike someone who might be picking up shifts in different areas while they travel around the country for 6 months and then plan to leave.
I hope that helps – and good luck with the visa!
Rebecca
Hi, I have landed in Australia in Dec 2021 on Skilled professional visa till 2025. I need to submit the TFN declaration form to my employer where I have to list my residency status for 2021-2022. What do I check under residency status- Australian resident for tax purpose or foreign resident for tax purpose?
Hi Rasik,
You can take the “Residency test” available on the Australian Tax Office (ATO) website to assess if you’re considered an Australian resident.
If you need further assistance after you have done the residency test, you can contact the ATO directly at 13 28 61.
It would also be worth seeking professional assistance from a tax lawyer to get personalised advice.
I hope this helps!
Regards,
Alison
Hi Anand,
It doesn’t sound like you’d be considered an Australian Resident for Tax Purposes. You can find all the details about it on the ATO website but the guidelines are as follows:
Generally, we consider you to be an Australian resident for tax purposes if you:
– have always lived in Australia or you have come to Australia and live here permanently
– have been in Australia continuously for six months or more, and for most of that time you worked in the one job and lived at the same place
– have been in Australia for more than six months of the year, unless your usual home is overseas and you do not intend to live in Australia
– go overseas temporarily and you do not set up a permanent home in another country
– are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long.
Hi,
Recently as a New Zealand resident for most of my life but with an Australian passport, because I was born in Sydney, I will be acquiring a shares portfolio which originates from Australia and I am keen to transfer this to NZ. I could leave it in Australia if necessary, though not keen, what are my tax obligations? I’m hoping none. What if I were to sell the shares?
Hi Jennifer,
Thanks for your comment!
Interesting question and a tough one as it relates to New Zealand tax and commercial law. Unfortunately, we can’t advise you on what the best steps are to take, but yes, it is possible to open an account with a New Zealand broker and transfer Australian shares over to them. It’s best you first seek advice from a legal practitioner that specializes in NZ commercial law, as they should be able to advise you on the best action to take to save you the most money. From the Australian side, if you choose to sell your shares you may need to pay capital gains tax depending on how long you hold the portfolio for and when the original shares were purchased. If you choose to keep the shares in Australia, you will be subject to NZ tax rules on offshore investment.
Hope this helps and feel free to reach out to us again for further assistance.
Best,
Nikki
Hi, I am non-resident Australian citizen living offshore for the past 5-6 years. This coming year one of my sons will return to Australia to study at a university. My wife and my other son are planning to go back as well but I will remain offshore with couple of visits of no more than 3 months each back to Australia. I am thinking to mortgage a house in Australia so my family live in. With this situation, Do I be considered resident for tax purposes because of my family situation or I still be non-resident?
Many thanks, Andrew
Hi Andrew,
Thank you for leaving a question.
You may need to try the “Residency test” available on the guide we are on to assess whether an individual is an Australian resident for tax purposes. There are 4 factors that you need to check on this. Please see below:
The ‘resides’ test.
The domicile test.
The 183-day test.
The superannuation test.
If you need further assistance after you have done the residency test, you may contact the ATO directly to get further details on your residency classification. Hope this helps!
Cheers,
Reggie