Client often ask whether they are Australian resident for tax purpose or not. Generally, if a taxpayer is an Australian resident for tax purposes, all income earned both in Australia and internationally, is declared on the tax return. If a taxpayer is a non-resident for tax purposes, only all income earned in Australia is declared on the tax return. Also, for company registration purpose, Australian Company need to have local directors, which mean one director must be tax resident and has a residential address in Australia. That’s why we write this article to explain the main concept to help you understand the tax resident mean, which is different to the permanent resident we normally refer to.
Generally, Australian Tax Office (“ATO”) 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 during financial 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, or
• are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long.
There are four tests for residency, namely resides test, domicile test, 183 day test, and superannuation test. An individual only needs to satisfy one of these tests to be considered a resident of Australia for tax purposes. The resides test is the primary test. The other three tests are sometimes referred to as the statutory tests.
Claire Chang