GM Tax

Non Resident Tax Australia

Am I An Australian Tax Resident For Tax Purposes?

As a permanent/temporary resident visa holder of Australia you can be a tax resident for tax purposes without being an Australian citizen.

There are statutory tests to determine your residency:

non-resident-tax-return-australia

Resides Test

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 you do not need to apply any of the other residency tests.

Some of the factors that can be used to determine residency status include:

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

There are several aspects of the resides test

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Domicile Test

You are an Australian tax resident if your domicile (the place that is your permanent home) is in Australia, unless your permanent place of abode is outside of Australia.

A domicile is a place that is considered to be your permanent home by law.  For example, it may be a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

There are two steps to this test:

Determine your domicile

  • If not in Australia, the domicile test is not satisfied.
  • If in Australia, go to step two.

Determine your permanent place of abode

 

  • If not in Australia, the domicile test is not satisfied.
  • If in Australia, you are considered an Australian resident for income tax purposes.

183 day Test is the second statutory test

This test only applies to individuals arriving in Australia. You will be a tax resident of Australia under this test if you are physically present in Australia for more than half the income year, whether continuously or with breaks.

Under this test, 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
  • you have no intention to take up residence here.

In this test, your usual place of abode must be outside of Australia. This is different to the first test (domicile) that requires us to be satisfied that your permanent place of abode is outside Australia.

Commonwealth Superannuation Test is the third statutory test

If you as a Australian government employee, you are considered a resident of Australia for tax purposes, even if you live outside the country. This applies to employees who contribute to certain public sector superannuation schemes.

Under the Commonwealth superannuation test, you are an Australian tax resident if you are a contributing member of:

  • the Public Sector Superannuation Scheme (PSS), or
  • the Commonwealth Superannuation Scheme (CSS).

This test does not apply if you are a member of the Public Sector Superannuation Accumulation Plan (PSSAP).

If you are an Australian resident under either of these this tests, your spouse and any children under 16 years old are also Australian residents for tax purposes.

If declared an Australian Resident

You must prepare a Tax Return and declare your worldwide income regardless of whether any income is remitted to Australia.

Non Resident Tax Obligations

If declared a Non Australian Resident

You must prepare a Tax Return and declare Australian sourced income only and/or foriegn sourced income should you have an outstanding Student Loan. 

Types of taxable Australian sourced income:

  • Rental Income
  • Managed Funds – not all income is reportable as a non resident

Liability for income Tax

Non Resident Tax Rates 2022

0  –  $120,000                  32.5%

$120,000 – $180,000   $39,000 + 37%

$180,001 +                     $61,200 + 45%

Tax Free Threshold
The tax free threshold is not available to non-residents of Australia.

Foreign residents Medicare levy exemption

If you are considered a foreign resident for tax purposes for:

 

 

  • the full year, you can claim a full exemption from the Medicare levy
  • only part of the year, you can still claim full exemption from the Medicare levy for that period if:
  •  you didn’t have any dependants for that period
  • all your dependants were in a Medicare levy exemption category for that period.
medicare

Capital gains Tax

Capital gains tax (CGT) applies to assets you sell or dispose of, except for:

 

 

  • exempt assets, such as your home and car
  • assets you acquired before CGT started on 20 September 1985.

The most common assets which are considered chargeable CGT assets; 

 

australian-property

Rent income from Australian property

If you own a rental property or holiday home you need to declare the income received and expenses incurred.

 

You are also required to keep records for 5 years for properties you rent out, make available for rent or intend to rent out.

You will need these records to calculate how much:

 

  • rental income you need to declare, and
  • expenses you can claim as a deduction.
australian-tax-office

Penalties For Late Lodgement

The ATO generally do not apply late filing penalties automatically if you are late in lodging your Tax Returns.

The ATO will consider your circumstances when deciding what action to take.

If you fail to lodge, the ATO will advise you by phone or in writing.

You may receive a Failure to lodge (FTL) on time penalty if you have an obligation to lodge a return, report or statement to the ATO by a particular day, but you do not lodge by the due date.

Should the ATO apply FTL penalty which varies of the size of the entity and the period of time since the due date for lodgment.you will be notified in writing and will include:

 

  • the reason for the penalty
  • the amount of the penalty
  • the due date for payment (at least 14 days after we give notice).

Please refer to the ATO website as to how to calculate the FTL penalty.

Yes, if you are in receipt of Australian sourced income or you have an outstanding student loan.

Yes,  if you are in receipt of Australian sourced income or you have an outstanding Student Loan.

Your Tax File Number is all that is required to file a tax return.

You will pay tax in the country to which you are a tax resident at your highest marginal rate of tax.  You will pay tax in Australia on your Australian sourced income ONLY and you may be eligible to claim a foreign tax credit in the country to which you are considered to be a tax resident to the extent that your Australian sourced income is reported and taxed in your country of resident.

Unless registered with a tax agent you have until 31st October to lodge your tax return. 

Otherwise you can benefit from an extended filing deadline of the following May if you use a tax agent such as GM Tax.

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Australian Non Resident Tax Return Services

We at GM Tax can assist you with the electronic lodgment of your Australian Tax Return, with fixed fee quotes for advisory work and tax returns.

 If you are leaving Australia and would like a fixed fee proposal from a firm of UK & Australian tax advisors that understands the issues affecting individuals leaving Australia please complete our online enquiry via our contact us button or by calling a GM Tax office closest to you. 

GM Tax also offers the following services:

  • Tax planning advice and guidance with regards to your residency status in Australia.
  • Preparation of Australian tax returns, with all returns submitted to the ATO electronically where possible.
  • Advice on the tax position where a property in Australia is being let while a taxpayer is living overseas.
  • Capital Gains Tax advice and guidance in relation to your Australian assets.
  • Assistance to ensure Australian sourced income of those who are non-residents of the Australia is properly taxed and is not taxed twice, or double taxed.
  • This last point is particularly relevant to those who have Australian sourced income or capital gains which may also be subject to tax in the country in which the taxpayer is now resident.