Are You a Resident or Non-Resident for Australian Tax Purposes? Don’t Get Caught Out!

In order to know your tax responsibilities in Australia, you have to know whether you are considered a resident or non-resident for Australian tax purposes. This may seem clear but if you are working overseas, travelling often, or you do not have a permanent home in Australia, you may think you are exempt from Australian taxation laws when you really aren’t.

What is a Resident for Tax Purposes?

If you reside in Australia, you have a home and you’re settled in Australia, it is quite clear, according to the ATO (Australian Taxation Office), that you are considered a resident and that you are subject to Australian taxation laws. But if your situation is not as clear, you might want to check with the ATO to see whether you are considered a resident.

The ATO has a number of detailed residency calculators on their website which you can access here. Remember that you only need to pass one of these to be considered as an Australian resident for tax purposes.

The reason why residency for tax purposes is complex is because there is not one defining factor that confirms your status. The ATO looks at a number of factors in your circumstance to define your status. Your citizenship may have nothing to do with your tax responsibilities. Even if you are a citizen of another country, you can be considered a resident of Australia for tax purposes, depending on your activities.

For example, you can be considered a resident if you:

  • Perform your day to day activities, especially those of a leisurely kind, in Australia, even if you are moving often without a permanent residence.
  • Have a business, assets, or a family in Australia, even if you stay elsewhere.
  • Have the intention to stay in Australia as soon as you arrive.

Some of your responsibilities as a resident for tax purposes include:

  • Lodging tax returns
  • Declaring all sources of income receivedworldwide, meaning all income earned in Australia as well as overseas
  • Paying the 2% Medicare levy, which automatically comes out of your income, if you earn over $18,000 a year

What is a Non-Resident for Tax Purposes?

If you do not pass the tests provided by the ATO, you may be considered a non-resident (also called “foreign resident” meaning that you do not need to claim your overseas income in your Australian tax return. But it’s best to have the ATO or an accountant look into your situation to make sure you do not make an incorrect conclusion.

As a non-resident for tax purposes, you will have to lodge a tax return if you earned any income in Australia (eg. rental income from investment properties located in Australia, shares traded on the Australian Securities Exchange, etc.).

Why Does All This Matter?

In 2016, a Malaysian investor suffered the consequences of assuming his non-residency status for his tax responsibilities in Australia. Sir Yii Ann Hii was faced with an order from the ATO to pay $50m in taxes because ATO had considered him to be an Australian resident for tax-purposes for a number of years, simply because his wife and children lived in Australia. Sabrina Ong, who is a partner here at Fortiz Accountants, commented on this case, informing of the many ways that the ATO can decide your residency status. Read more here.

Your Worldwide Tax Responsibilities

If you are a resident and you are claiming income from Australia and overseas, it’s possible that that income overseas is also subject to taxation laws in its source country. Australian’s double tax agreements (DTA) ensures that you don’t have to get taxed twice for the same income.

For a comprehensive list of countries with a tax treaty with Australia, click here.

What You Should Do Now

Know your status as soon as possible to avoid incurring payments that you are not aware of. Refer to the ATO’s comprehensive residency tests (above) to see whether you are subject to paying Australian taxes and to know what you have to claim in your next tax return. If you are still unsure about your tax responsibilities as a resident or foreign resident, an accountant will be able to help you!


Disclaimer: This blog post has been simplified to cover the common scenarios. This should not be construed as advice from Fortiz Accountants. There are many other factors to be considered and each case is unique. Therefore, we encourage readers of this blog post to contact Fortiz Accountants for assistance with their specific circumstances.


Our accountants are well-versed in the complexities of Australian taxation laws. If you are unsure about your residency status, or youre concerned about income from employment and investments overseas, contact our accountants here at Fortiz Accountants! As registered tax agents, we can also help you prepare and lodge your tax returns. Most importantly, we can help you to ensure that you fulfil all your tax obligations in Australia.

Contact us and see how we can assist you!

Australia & Malaysia Agree to Share Financial Data to Fight Tax Evasion

From time to time, Fortiz Accountants receive calls and emails from concerned Malaysians living in Melbourne and Malaysians planning to migrate to Australia regarding possible exchange of financial data of tax residents between Malaysia and Australia.

Some of the common questions relate to the transfer of EPF funds to Australia, transfer of cash savings or cash gifts received from parents to bank accounts in Australia, possible capital gains taxes implications on the sale of properties in Malaysia after moving to Australia, Australian tax on employment or business income earned in Malaysia while the rest of their family members live in Australia.

The 6-month rule, the 6-year rule and the other taxation topics, such as, taxation on worldwide income earned by Australian tax residents are often explained. During tax advice/tax planning sessions, we have provided clarity to clients regarding their personal circumstances and how the various tax laws apply to them. Our advice have included appropriate timing for disposal of assets, obtaining market valuations of assets, keeping important records and paper trails, and so on.


One of the partners at Fortiz Accountants moved from Malaysia to Australia over 20 years ago. Contact us for assistance if you are migrating from Malaysia to Australia, a recent migrant from Malaysia, planning to purchase an investment property in Australia or a Malaysian entrepreneur planning to start a business in Australia.

Are You a Resident for Australian Tax Purposes?

Determining whether you are a tax resident in Australia involves more than the commonly known 183-day test. There are a few other tests.

The primary test of tax residency is called the ‘resides test‘. If you reside in Australia, you are considered an Australian resident for tax purposes and don’t need to apply any of the other residency tests.

If you don’t satisfy the resides test, you’ll still be considered an Australian resident if you satisfy one of three statutory tests:

  • The domicile test: You’re an Australian resident if your domicile (broadly, the place that is your permanent home) is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.
  • The 183-day test: If you’re actually present in Australia for more than half the income year, whether continuously or with breaks, you may be said to have a constructive residence in Australia, unless it can be established that your usual place of abode is outside Australia and you have no intention of taking up residence here.
  • The superannuation test: This test ensures that Australian government employees working at Australian posts overseas are treated as Australian residents.

The ‘resides test‘ may involve ATO taking into account any or all of the following factors in determining where you reside:

  • intention or purpose of presence
  • family and business/employment ties
  • maintenance and location of assets
  • social and living arrangements.

This is where it seems that a Malaysian tycoon ended up in a quandary. ATO deems him to be tax resident while he believes he is not due to living in Australia for only short periods and below the 183 days per year. The case is still ongoing as of the date that this blog post was written.

Further information on ATO’s website:

ATO Residency Tests
Residency – Resides Test

The Star News Articles:

Malaysian timber tycoon in RM160mil Australian tax quandary
Malaysian timber tycoon sues Australian government in tax dispute

Sabrina Ong is a partner at Fortiz Accountants. If you are migrating from Malaysia to Australia, a Malaysian entrepreneur planning to start a business in Australia or a recent migrant from Malaysia, make an appointment at either one of our offices to find out how we can assist you.