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Tax Residency and Liability while stranded overseas

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Hi,

 

I am in an unusal situation and need clarification on my tax residency and liability status. I left Australia in March 2020 while on a 457 Visa for a holiday but as the COVID-19 restrictions hit shortly after I have not been able to return into Australia. My 457 has since expired and I have applied for PR which is still pending approval. Given I was applying from outside Australia I did not go onto a bridging visa. Throughout 2020 and now 2021 I have continued to work for my Australian company from overseas,as I can work virtually, and have continued to be paid monthly. The regular taxes have continued to be deducted from my gross salary each month.

So given I have now been stranded overseas for nearly a year, am I still tax resident in Australia for tax purposes? I have contacted the tax authorities in the country where I am now to get clarificaiton from this side but I want to know what to expect come tax time in Australia. 
Any answer or point in the right direction would be appreciated.

 

Thanks

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Hi @somara89,

 

There are a few tests to help determine your residency status for Australian tax purposes:

 

The 183-day test (the duration of presence within Australia)
- You are considered a resident if you're present in Australia for more than half of the income year.

The domicile test (the place considered to be your permanent home)
- You are considered an Australian resident if your domicile is in Australia unless we are satisfied that your permanent place of abode is outside of Australia.

The resides test (your behaviour while in Australia)
- You may be considered an Australian resident if your day-to-day activities in Australia are relatively similar to your behaviour before entering Australia (including aspects of your intention & purpose, family/business/employment ties, maintenance and location of assets, and social and living arrangements).

 

For example, if you had been in Australia for more than 6 months of the financial year on a 457 Visa, and had made steps to form a more permanent presence as per the above tests, then went overseas (where the Visa subsequently expired), then you would likely be considered a resident for tax purposes.

 

I highly recommend to look through the links I provide below to explore these tests in more detail, and you'll possibly find the examples on each page helpful as well. But please reach out if you're still uncertain after looking at the following pages Smiley Happy

 

Work out your residency status for tax purposes

183-Day test 

Domicile test

Resides test

RachATO

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Most helpful response

ATO Certified Response

ATO Community Support

Replies 2

Hi @somara89,

 

There are a few tests to help determine your residency status for Australian tax purposes:

 

The 183-day test (the duration of presence within Australia)
- You are considered a resident if you're present in Australia for more than half of the income year.

The domicile test (the place considered to be your permanent home)
- You are considered an Australian resident if your domicile is in Australia unless we are satisfied that your permanent place of abode is outside of Australia.

The resides test (your behaviour while in Australia)
- You may be considered an Australian resident if your day-to-day activities in Australia are relatively similar to your behaviour before entering Australia (including aspects of your intention & purpose, family/business/employment ties, maintenance and location of assets, and social and living arrangements).

 

For example, if you had been in Australia for more than 6 months of the financial year on a 457 Visa, and had made steps to form a more permanent presence as per the above tests, then went overseas (where the Visa subsequently expired), then you would likely be considered a resident for tax purposes.

 

I highly recommend to look through the links I provide below to explore these tests in more detail, and you'll possibly find the examples on each page helpful as well. But please reach out if you're still uncertain after looking at the following pages Smiley Happy

 

Work out your residency status for tax purposes

183-Day test 

Domicile test

Resides test

RachATO

Newbie

Replies 1

Hi @RachATO 

 

Thank you very much for the below response. It was very helpful.

 

Is there somewhere I can contact to get an 'official' response? I believe based off the resides/domicile test that I am a tax resident, especially considering if/when my PR gets approved I will be returning asap. But obviously my opinion may differ from the ATO itself, I just want to be sure I am not caught with diff liability come tax time, and to notify the tax authorities where I currently am that I am still considered tax resident in Australia so I don't get double taxed.

 

Thanks again

Community Moderator

Replies 0

Hi @somara89,

 

Please contact our Early Engagement team linked below,  who will be more than happy to review  your status.

 

Early Engagement