As an Australian tax resident everyone has to lodge an Australian Tax Return with the Australian Taxation Office (ATO) regardless of whether you are on a temporary residency visa or considered to be temporary resident for tax purposes to report your Australian source income and certain overseas income unless you meet the thresholds not to lodge.
The Australian tax year runs from 1st July to 30th June.
You will need to apply for a tax file number in order to lodge an Australian Tax Return.
If your income is below the tax-free threshold ($18,200) you will still be issued a tax return to complete by the ATO however, you may not need to lodge a tax return.
You can report your income by lodging a CU non lodgment form to the ATO advising them that your income is below the threshold but only if tax has not been withheld from employment income or any other source.
You are a temporary resident if:
Under the Social Security Act 1991 an ‘Australian resident’ is generally a person who resides in Australia and either an Australian citizen of holds a permanent resident visa.
Individuals who were in Australia before 26 February 2001 and held a protected special category visa holder are also considered to be Australian residents for the purposes of the Social Security Act 1981.
Australian tax residents
If you are arriving in Australia to go live or work regardless of whether you arrive on a temporary residency visa such as a 457 now referred to a 482 visa or permanent visa for a period of time it is important that you obtain professional tax advice in relation to your Australian tax residency position and the impact this may have on your future reporting and ongoing tax implications.
There are a number of tests to best determine your residency position which are detailed below:
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:
There Are Several Aspects of The Resides 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
Determine your permanent place of abode
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:
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.
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:
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.
It is possible to be a tax resident in more than one country, in which case, individuals will need to turn to any double-tax treaty for a tie-breaker rule to determine treaty residency.
As part of the 2021–22 Federal Budget, the Government announced that it will replace the individual tax residency rules with a new “bright lines” test, based on the Board of Taxation’s recommendations.
This measure is proposed to have effect from the first income year after the date of Royal Assent of the legislation.
This has not yet become legislation and therefore it is a note only for consideration.
We at GM Tax provide fixed fee quotes for advisory work and tax returns.
If you are living in Australia and would like a fixed fee proposal from a firm of UK & Australian tax advisors that understands the issues affecting individuals residing here including the different reporting requirements for temporary, permanent and working holiday visa holders please complete our online enquiry via our contact us button or by calling a GM Tax office closest to you.
Contact UsTemporary residents may still be considered to be resident in Australia for tax purposes
No, WHV holders whose employers are registered as a WHM employer will withhold tax are a rate of 15% of the first $45,000, 32.5% up to $120,000, 37% up to $180,000 and 45% for $180,000 and over.
This will depend on whether you are eligible for Medicare benefits or considered to be a foreign resident. If you are then you either may a claim for the exemption on your tax return or you obtain a Medicare Entitlement Statement.
Backpacker tax is 15% up to $45,000, 32.5% up to $120,000, 37% up to $180,000 and 45% for $180,000 and over.
You can apply via the ATO website.
The filing deadline will vary depending on whether you are lodging the tax return yourself of via a registered tax agent:
The remittance basis is an alternative tax treatment available to individuals who are resident of the UK but not domiciled in the UK and have foreign income and gains.
