Australia — Tax Residency Rules

|---| | Country | Australia | | Residency tests | 4 tests — resident if ANY test is satisfied | | Key test for most individuals | Resides test (facts and circumstances) | | Exit CGT | Deemed disposal of most non-TAP CGT assets on departure | | Primary legislation | ITAA 1936 s.6(1) definition of "resident" | | Tax authority | ATO (ato.gov.au) | | Verified by | Pending — Australian CPA/CA sign-off required |

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Section 2 — The Four Residency Tests

A person is an Australian tax resident if they satisfy any one of these:

Test 1: Resides Test (Ordinary Concepts)

The primary test. A person "resides" in Australia under ordinary concepts — considers:

• Intention and purpose of stay
• Family and business ties
• Maintenance of a home in Australia
• Frequency, regularity, and duration of visits
• Social and living arrangements

No single factor is determinative. Short-term visitors may satisfy this test; long-term absentees may not.

Test 2: Domicile Test

A person domiciled in Australia is a resident UNLESS the ATO is satisfied they have a permanent place of abode outside Australia.

• Domicile in Australia is acquired by birth (domicile of origin) or by living in Australia with intent to remain permanently
• "Permanent place of abode" requires more than temporary accommodation — established overseas home, settled intention to remain, family ties overseas
• Applies to Australians living abroad who have not established a clear permanent place of abode elsewhere

Test 3: 183-Day Test

A person who is present in Australia for 183 days or more during an income year is a resident UNLESS:

• Their usual place of abode is outside Australia, AND
• They have no intention of taking up residence in Australia

This test can catch short-term workers and frequent visitors.

Test 4: Superannuation Test

Australian Government employees contributing to a Commonwealth public sector superannuation scheme are residents. Rarely relevant outside government employment.

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Section 3 — Ceasing Australian Tax Residency

There is no formal departure filing or "exit application" required. Residency ceases when the facts show you have left Australia and established residency elsewhere.

The ATO looks at:

• You have left Australia
• You have established a home (permanent place of abode) in another country
• Your family ties, bank accounts, memberships, etc. have moved
• You do not intend to return to live in Australia

Date of cessation: the day you departed Australia (if that departure is the clear break), or a later date if you maintained strong Australian ties after departure.

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Section 4 — Exit CGT: The Departure Tax

When you cease to be an Australian tax resident, you are treated as having disposed of most CGT assets at market value on the day before you stopped being a resident.

This triggers CGT on any unrealised gains in those assets.

Exceptions — no deemed disposal on exit for:

• Taxable Australian Property (TAP): Australian real property, shares deriving value from Australian real property. Australia retains taxing rights on TAP when actually sold.
• Assets used in an Australian permanent establishment

Election to defer: you can elect to NOT trigger exit CGT and instead remain subject to Australian CGT when the assets are eventually sold (even as a non-resident). This defers the tax but means ongoing Australian filing obligations.

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Section 5 — Dual Residency

Australia's DTAs with 45+ countries contain tie-breaker rules for individuals resident in both Australia and the treaty country:

1. Permanent home: resident of the country where permanent home is available
2. Centre of vital interests: if homes in both, resident where personal/economic ties are closer
3. Habitual abode: if still unclear, where person habitually abides
4. Nationality: if still unclear, by nationality
5. Competent authority agreement

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Section 6 — Partial-Year Residency

In the year of departure or arrival, a person may be a resident for only part of the year.

• Australian-source income: always taxable in Australia, regardless of residency status
• Foreign-source income: only taxable during the period of Australian residency
• CGT assets: exit CGT applies to non-TAP assets from the date residency ceases; any subsequent gains on those assets (if sold after) generally not taxable in Australia (unless TAP)

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Section 7 — Sources

• ITAA 1936, section 6(1) — definition of "resident of Australia"
• ATO: ato.gov.au/individuals-and-families/coming-to-australia-or-going-overseas/your-tax-residency
• ATO Taxation Ruling TR 98/17 — residency tests
• ATO: Capital gains tax (CGT) and ceasing to be an Australian resident

Working paper only. Residency determination is highly fact-specific. Engage an Australian tax adviser for a formal residency opinion before making decisions that rely on non-resident status.