One of the most important questions that Australian expats should be asking is – ‘am I an Australian resident for tax purposes or not..?’
If you’re not sure of the answer to this question, or even if you just have some slight concerns, it’s time to seek advice, particularly given the recent announcement from the Australian Tax Office (ATO).
What has the ATO recently announced?
The ATO has recently launched a data-matching program with the Department of Home Affairs, which will allow them access to arrival and departure records to and from Australia between the 2016-17 and 2022-23 financial years. The key goals of the ATO here are to ensure that travelers are complying with their tax return obligations, as well as any tax liabilities and superannuation.
The ATO has estimated that approximately 670,000 individuals will be analysed each financial year, which will provide the ATO with the following key data:
- Your full name
- Your date of birth
- Your arrival and departure date to and from Australia
- Your passport information
- Your residency information and/or your visa status
What does this mean for Australian expats and residents?
Clearly, with this new data-matching system, the ATO will be able to quickly identify any potential discrepancies or non-compliance with the tax laws. If the ATO identifies any areas of concern, they will contact the individuals in question and allow them up to 28 days to respond to their queries. This also highlights the importance of ensuring that your contact information is up to date with your myGov account and various providers.
How do I know if I’m an Australian tax resident or not?
It’s vital to first be aware of the fact that to be deemed to be an Australian tax resident that you do not necessarily need to be an Australian citizen, and simply having a home overseas or spending more than 183 days outside of Australia will not be enough to guarantee your non-residence status for tax purposes.
The two key tests that are applied by the Australian Tax Office (ATO) are the Resides Test and the Domicile Test. The Domicile Test is used to determine where your permanent place of abode is, while the Resides test is more complex and considers your behaviour when you’re back in Australia, where your personal and financial assets are located, any family or business ties to the country and your overall intentions when you return to Australia.
Next, the ATO will apply the 183-day test, which is a very simple assessment of whether you spent more than 183 days within the financial year inside Australia. It’s important to note here that this does not have to be consecutive. Finally, the ATO could apply the Commonwealth Superannuation Test, which outlines that Australian Government employees working overseas who are members of the Commonwealth Superannuation Scheme are likely to be treated as Australian tax residents.
What should I do next?
Firstly, you can check out the online residency test created by the ATO here. It’s important to note that simply by ‘passing’ this test, your tax residence is not automatically guaranteed so it is important to seek professional advice and ensure that you and your family are not in for some unexpected surprises or tax consequences in the future.
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General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.