Tax Implications of Australian Tax Resident vs Foreign Resident

Australian resident for tax purposes:

  1. Tax payer is required to declare worldwide income earned on tax return.
  1. Tax payer on a temporary visa, being a temporary resident, most of your foreign income is not taxed in Australia and you do not declare it on your Australian tax return. You only declare income you derive in Australia, plus any income you earn from employment performed overseas for short periods while you are a temporary resident of Australia.

Foreign resident for tax purposes:

  1. Tax payer is required to declare only Australian sourced income earned on tax their return. Do not declare foreign income on your Australian tax return.

Residency status – arriving in Australia

My partner and I immigrated to Australia via the independent skilled visa in 1999. Being migrants from Singapore, we fully understand the stress, uncertainties and risks involved in your enormous decision to relocate and reside in a new country.  

Regardless of which visa you may have entered into Australia on; whether temporary or permanent employment, study, business or investment visa, it is essential for you to understand your tax compliance and obligations in Australia.

You can click on the following Australian Taxation Office’s online residency calculator tool for a general assessment.

Taxation Ruling TR 98/17 specifically provides for the interpretation of Income tax of the residency status of individuals entering Australia in details. The Commissioner refers to precedent cases and the four tests for determining whether an individual is a resident for tax purposes. These tests are:

  1. Residence according to ordinary concepts.
  2. The domicile and permanent place of abode test.
  3. The 183 day test.
  4. The Commonwealth superannuation fund test.

Residency status – leaving Australia

In the recent challenging years;  low global demand for mining commodities, oil and gas resulting in over supply across commodities is currently causing an alarming downturn in the mining industry in Australia. In turn, we notice tax payers who had full time positions were affected by retrenchment, termination or contracts expired and not renewed. These circumstances cause job seekers to either return to their home countries or venture to other countries, where employment opportunities are available.

The Australian Taxation Office has published Taxation Ruling IT 2650 that provides guidelines for determining whether individuals who depart Australia cease to be Australian residents for income tax purposes during their overseas stay or employment. If you are in this position, being an Australian tax resident before leaving Australia for a few years or permanently, it is highly recommended that you seek the advice of registered Tax Agents’ who are familiar with residency taxation matters, recent tax rulings and determinations.

You can click on the following Australian Taxation Office’s online residency calculator tool for a general assessment

As tax consequences of residency differ significantly and every individual and/or family member’s tax circumstance is different, it is advisable that you seek an experienced Registered Tax Agent for informed, professional and updated advice; if you encounter doubts or have questions with regards to your tax residency matters. Our Practice is pleased to offer a 20 minute no-obligation consultation if you mention this article post.


Stella Leong Senior AccountantStella Leong – Success Tax Professionals, Perth

Tel: 08 9467 3652

Source: ATO