Understanding Tax Residency

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Introduction

What is Tax Residency?

Tax residency determines how much of your income Australia can tax and what benefits you can access. It's not the same as your visa status or citizenship - it's based on specific tests set by the ATO.

The Four Tax Residency Tests:

  1. Ordinary meaning test: Your usual place of residence
  2. 183-day rule: Present in Australia for 183+ days
  3. Domicile test: Your permanent home is in Australia
  4. Commonwealth superannuation test: For government employees

Why This Matters

Australian Tax Resident

  • ✓ Tax on worldwide income
  • ✓ $18,200 tax-free threshold
  • ✓ Access to tax offsets
  • ✗ Medicare levy applies

Non-Resident

  • ✓ Tax only on Australian income
  • ✗ No tax-free threshold
  • ✗ Higher tax rates
  • ✗ Limited tax offsets