What happens if my residency status changes halfway through the financial year?

Resident

Once you leave Australia permanently, you change residency status and cease to be a resident for tax purposes on the date of your departure. Before that date, you will be liable for tax on your worldwide income. After that date, you will be liable only for your Australian-sourced income. The situation is reversed for those returning to Australia permanently. Continue reading “What happens if my residency status changes halfway through the financial year?”

What tests can I use to determine my residency?

Resides Test

The first test that is always used to determine residency is the Resides Test. If you ‘reside’ in Australia, according to the normal definition of the word, you are an Australian resident. The test takes into account how you entered the country, your intentions, family and business ties, the maintenance and location of assets, your social and living arrangements, and the degree of continuity, routine, or habit of your presence in Australia.

 

If you fail the Resides Test, you are considered a resident according to one of these three tests.

The Domicile Test

Both your domicile and your permanent place of abode are in Australia, you are an Australian resident for tax purposes. But if your permanent place of abode is overseas, you are not an Australian resident.

The 183 Day Test

You were in Australia for more than 183 days (half the income year) unless you can prove your usual place of abode is outside of Australia and you have no intention of taking up residence there.

The Superannuation Test

You were a member of the superannuation scheme established under the Superannuation Act of 1990 or an ‘eligible employee’ for the purpose of the Superannuation Act 1976 you are considered an Australian resident.

 

Read more about how to determine your residency here.

Am I an Australian resident for tax purposes?

Australian Resident Requirements:
  •  always lived in Australia
  • moved to Australia permanently
  • leave Australia temporarily and do not set up a home elsewhere
  • been in Australia for more than six months working the same job and living in the same place
  • been in Australia for more than half the financial year (unless they maintain a home overseas and do not intend to live in Australia)
  • visiting, working and living in one location in Australia and have taken measures to make Australia your home
  • attending an Australia institution for more than six months

 

If there’s any ambiguity regarding your residency status, the determination may depend on your intentions.

 

However, if you leave Australia permanently, you will cease to be a resident on the day you depart. You will be treated as a resident for the fraction of the year when you were in Australia.

 

If none of these conditions apply, you are most likely a nonresident for tax purposes. Read our blog for more details to determine if you are an Australian resident.

How does residency affect my tax situation?

Residency

First of all, residents are taxed on their worldwide income and nonresidents are taxed only on their Australian-sourced income.

 

Tax rates 2017-2018 for all nonresidents
Taxable Income Tax Paid on this Income
$0-$87,000 32.5c per $1
$87,001-$180,000 $28,275 plus 37c per $1 over $87,000
$180,001 and over $62,685 plus 45c per $1 over $180,000

 

Tax rates* 2017-2018 for all residents
Income Tax Paid on this Income
$0 – $18,200 Nil tax payable
$18,201 – $37,000 19c per $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c per $1 over $37,000
$80,001 – $180,000 $19,822 plus 37c per $1 over $87,000
$180,001 and above $54,232 plus 47c per $1 over $180,000

 

*In addition, these rates include the Temporary Budget Repair Levy, however, they do not include the Medicare Levy.

Read our blog for more details about income tax rates.

How do I apply for a TFN?

Tax File Number

A TFN, tax file number is essential when lodging a tax return to the ATO. Based on your residency status, you can apply for a TFN.

Australian Citizen

If you are an Australian citizen, you will need to complete the paper form Tax file number – application or inquiry for individuals (NAT 1432).

Permanent Migrants

Permanents migrants and temporary visitors, including working holidaymakers, can apply for a TFN anytime after they enter Australia.

Nonresidents

Nonresidents can apply for a TFN by using (NAT 2628).

16 or Older

Note that Australian citizens aged 16 or older who live in the greater Melbourne region, Albury, or Wagga Wagga can apply for a TFN online by visiting TFN pilot.