How to Determine If You’re an Australian Resident for Tax Purposes

How to Determine If You're an Australian Resident for Tax Purposes

If you recently arrived or departed from Australia, you’ll need to report your residency status on your tax return.

Living in a new country can be overwhelming on it’s own, and wrapping your mind around a complicated subject like residency just adds to the confusion. We’re here to help.

E-Lodge offers an easy way of doing taxes. Not only that, but were here to clarify how residency affects your taxes and who is in fact considered a resident for tax purposes.

Do you meet the ATO residency criteria?

The ATO follows it’s own set of residency criteria, which differs from other government agencies of Australia.

In other words, although you may be a non-resident for citizenship purposes, you could be considered a resident for tax purposes.

If you don’t meet the ATO’s “resides test”, you’re still considered a resident for tax purposes if you meet one of the following statutory tests;

1. 183 Day Test: The ATO states the following in regards to the 183 day test;

“If you are actually present in Australia for more than half the income year, whether continuously or with breaks, you may be said to have a constructive residence in Australia, unless it can be established that your usual place of abode is outside Australia and you have no intention of taking up residence here.”

In other words, you meet the 183 day test and considered a resident for tax purposes if you lived in Australia for at least 6 months. Time spent in Australia under 6 months means you’re a non-resident.

2. Domicile Test: If your permanent home (your domicile) is in Australia and you have no plans of leaving, you’re considered an Australian resident (unless the ATO disagrees).

3. Superannuation Test: If you’re a Commonwealth government employee working overseas, you (and your spouse and children under 16) are considered a resident for tax purposes as long as you’re either a member of the superannuation scheme or an ‘eligible employee’ under the Superannuation Act of 1976.

How Your Residency is Linked to Taxes

Wondering why your residency status even matters? Residency has a big impact on your tax situation. Here’s what it affects;

1. The tax-free threshold: The Australian tax-free threshold means those who are eligible to claim it will not be taxed on their first $18,200 of income.

Eligibility to claim the tax-free threshold lies in your residency status. Residents (for tax purposes) can claim it, while non-residents can not. In other words, being a non-resident means you’ll end up paying more taxes.

2. Tax on overseas income: Although being a resident for tax purposes means the first $18,200 you’ve earned won’t be taxed, it also means you’re subject to paying tax on your overseas income.

Generally, Australian residents are taxed on ALL income, meaning income from Australian sources and from non-Australian sources. Non-residents are only required to pay tax on income sourced in Australia.

3. Medicare Levy: Your residency status also determines whether or not you’re subject to paying the medicare levy.

Non-residents cannot claim medicare benefits and thus do not pay the medicare levy. On the other hand, being a resident for tax purposes, means a medicare tax is deducted from your income.

Get started on your tax return today

Once you know whether or not you’re considered a resident for tax purposes, you’ll be able to get started on your 2015 tax return.

E-Lodge makes doing taxes (and reporting your residency status) hassle-free. Before entering your income, you’ll simply enter the date you arrived in or departed from Australia.

Not only that, but most online tax sites don’t offer international bank transfer. With E-Lodge, you can even have your refund deposited into a foreign bank account! 

Whether you’re still in Australia, living in New Zealand, backpacking through Spain or adventuring through the UK, you’ll be able to complete your Australian tax return online from anywhere in the world with E-Lodge.

It’s easier with E-Lodge.

31/7/2014 Photo via Randi Hausken on Flickr


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