Resident or Non-Resident for tax purposes
“Are you an Australian resident?” is one of the first questions you are asked on your individual tax return, but the answer might not be as simple as you think. The Tax Office defines a “resident” much different than other Australian government agencies, like immigration, visas or even citizenship.
As your local accountant, we can assist you with questions like these whether you are from the Melbourne area or have recently moved here, we are here to help. We not only assist small to medium businesses, but work with individuals as well.
The Tax Office is interested in your earnings to determine if you are a “resident for tax purposes”. You may not be a permanent resident by immigration standards, or you may be here on a temporary visa, however this has no effect on your tax residency status.
What is an Australian “Tax Resident”?
The Tax Office considers you a tax resident if you:
- Have always lived in Australia or have come to Australia to live
- Have lived in Australia for more than half the tax year (unless you have a permanent home overseas and you have only come here for an extended visit – holiday) or
- Are an international student enrolled in study for more than six months.
You may be a tax resident even if you are not physically in Australia. For example:
- If you live in Australia, but are on an extended holiday overseas
- If you have moved to Australia and plan to live here, but are currently living somewhere else.
Why is tax residency so important?
The Tax Office treats residents and non-residents very differently when calculating tax. Implications for non-residents include:
- Non-residents taxed on Australian source– only taxed on income sourced in Australia
- Tax rates for non-residents
- $ 0 - $80,000 33c on each $1
- $80,001 - $180,000 $26,400 plus 37c on each $1 over $80,000
- $180,000 and up $63,400 plus 47c on each $1 over $180,000
- Medicare Levy– Non-residence do not pay levy and cannot claim Medicare benefits.
- Withholding tax on interest– 10% of interest earned from an Australian bank will be withheld for tax. (not included in assessable income if an overseas address is provided)
- Tax Offsets– non-residents cannot claim support schemes like: Schoolkids Bonus, family payments and help with healthcare
- Other requirements– a non-resident needs to have a TFN (Tax File Number) or will be taxed at the top rate.
- Double taxation agreements – An individual may be considered a resident of Australia and another country at the same time. Generally this occurs when an employee works for a foreign business, with a physical location in Australia. If you have specific questions on this, please contact out office.
In some cases where an Australian resident moves overseas for employment, but maintains a home in Australia, the Tax Office may still consider that taxpayer an Australian resident for tax purposes.
If the taxpayer moves overseas, and rents out their home, they may be considered non-resident for tax purposes. The Tax Office determines the status on a case-by-case basis.
If you have any questions about residency or individual income tax, please give this office a ring, our qualified Caulfield accountants will be happy to help.
Hillyer Riches Management Pty Ltd is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.