Australian citizen or foreign resident?
To determine your foreign tax situation, identify if you are an Australian resident or a foreign resident using the residency tests, as this affects your tax obligations and declaration requirements.
Category Matters
To determine your tax obligations, first establish whether you are an Australian resident or a foreign resident, as this affects the scope of income to declare.
Residency Tests
Use the 'residency test' criteria, including the resides test, domicile test, 183-day test, and Commonwealth Superannuation fund test, to determine your tax residency status.
Income declarations
Foreign residents declare only Australian income, while temporary residents must report both Australian and overseas income; neither group is eligible for the tax-free threshold or Medicare levy.
The first step into understanding your tax situation is to determine whether you are an Australian citizen, or a foreign resident for tax purposes. The two main categories largely differ in terms of tax payment duties whereas Australians are taxed on overall sources of income acquired from both domestic and overseas, while non-residents only need to declare income obtained from Australia.
A “residency test” is a quick way to determine the criteria you belong in.
More references and information are provided in Work Out your Tax Residency and Residency for Tax Purposes
A simple way know your status is through the ‘residency test’. An individual is considered an Australian resident if one of the criteria is met:
The resides test
Individuals who meet the standard meaning of reside which includes to dwell permanently or for a certain period and/or place, and to have a usual abode. The following are outlined to further determine a residency status:
- Actual presence
- Purpose and intention
- Business, Family or Employment Ties
- Location of Assets
- Living Arrangements
The domicile test
Pertains to your permanent home in Australia by law, unless the Commissioner rules otherwise.
The 183-day test
Individuals who spend more than six months in Australia, unless:
- the person’s usual place of abode has been established elsewhere
- there is clear intention of not gaining Australian residence
The Commonwealth Superannuation fund test
Only applies to specific Government employees of Australia who meet the eligibility criteria for Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) contribution.
Those who don’t count as Australian resident for tax purposes may either fit in any of the two categories:
Foreign resident
Individuals who are considered foreign residents are those who didn’t meet at least one of the residency tests. This means there is no tax-free threshold and Medicare levy is not paid. However, you are still obliged to declare any income acquired in Australia.
Temporary resident
Pertains to people who hold a temporary visa and applies to individuals whose spouse is not an Australia resident. It is still mandatory to declare income obtained from Australia as well as any income derived from employment performed overseas while being a temporary resident of Australia.
