Determining a taxpayer’s residency status is important as Australian tax residents are taxed on their world-wide income (Australian and overseas) where-as non-residents are only taxed on their Australian income.
Residency is a very complicated area and assistance can be gained by using the ATO’s Determination of Residency Tool or applying for a private ruling with the ATO.
The ATO normally treats the following taxpayers as Australian tax residents:
- If they have always lived in Australia.
- If they have migrated to Australia to live permanently.
- Been in Australia for more than six months and mainly had one job and worked at the one place.
- Come to Australia to study in a course of more than six months duration.
- Moved overseas for work purposes but have not set up a permanent home in another country.
- Actually been in Australia more than 183 days.
In contrast, the ATO normally treats the following taxpayers as foreign residents for tax purposes:
- Visiting Australia for more than six months, and for most of that time they were traveling and working in various locations around Australia.
- If they leave Australia permanently.