What Types of Tax Residency are there in Australia?

Understanding tax residency status is essential for determining how your income is taxed and what tax obligations apply to you. If you are from overseas and come to Australia to work, you will be classified as either a foreign resident or a temporary resident for tax purposes: 

Temporary Resident:

A temporary resident is a foreign national who holds a temporary visa allowing them to stay in Australia for a specific period. This group includes students, skilled workers, and visitors. Temporary residents have defined rights and conditions associated with their visa, including work rights and the duration of their stay. If they reside in Australia for more than half the year, they are generally treated as tax residents and may be taxed on their Australian income, though they can claim certain tax offsets and exemptions. 

Foreing Resident:

A foreign resident is generally someone who is not an Australian citizen or permanent resident and does not meet the criteria for tax residency in Australia. They may not hold a valid visa and tipically have limited rights; which can include restrictions on work and access to certain services.

Your residency status determines your tax obligations: 

1. Working Holiday Makers (WHM)

Working Holiday Makers are individuals who are in Australia on a working holiday visa (subclass 417) or a work and holiday visa (subclass 462). The Australian tax system has specific rules for WHM visa holders.

2. Australian Resident for Tax Purposes

Australian Resident for Tax Purposes means you meet the criteria to be taxed as an Australian resident. This generally includes:

• Ordinary Residency Test: If you reside in Australia according to the ordinary meaning of the term, considering factors like physical presence, intention, and personal ties.
• Domicile Test: If Australia is your domicile (permanent home) unless you can prove your permanent place of abode is outside Australia.
• 183-Day Test: If you are in Australia for 183 days or more during a financial year, you are generally considered a resident unless you have a permanent home outside Australia and do not satisfy other residency tests.
• Superannuation Test: If you are an Australian government employee working overseas, you may still be considered an Australian resident under this test.

This status includes student visa (Subclass 500).

3. Foreign Resident

A Foreign Resident for tax purposes is someone who does not meet the criteria for Australian residency. This status includes individuals who:

• Do Not Meet Any Residency Tests: They do not satisfy the Resides Test, Domicile Test, or 183-Day Test.
• Are Temporary Visitors: They might be in Australia temporarily and have a primary residence or permanent home outside Australia.
• Are on Non-Resident Visas: Such as certain business or tourist visas.

At Y&S Accounting, we specialize in assisting with the tax obligations, ensuring an accurate process. Please feel free to schedule an appointment with us on our website at www.taxbne.com.au/. We look forward to providing you with the support you need.