An individual will be a resident for Australian tax purposes if they satisfy one or more of the following tests as provided by the Income Tax Assessment Act 1936 (Cth.):
- The ordinary concepts test
- Domicile test
- 183 days test
- Superannuation test
The first of these tests, the ordinary concepts test, shows an individual to be an Australian resident where they ‘reside’ in Australia within the ordinary meaning of the word. The Domicile test means an individual will be considered an Australian resident where they are domiciled in Australia unless the Commissioner is satisfied that the individual’s ‘permanent place of abode’ is outside Australia. If an individual is physically present in Australia for more than 183 days in a tax year ended 30 June, they are considered an Australian resident for tax purposes. This is unless the Commissioner of Taxation is satisfied their place of abode is outside of Australia. The Superannuation test considers a person to be an Australian resident if they are a current member of certain Australian Commonwealth Government superannuation schemes or are the spouse or child (under 16 years) of such as a person.
The ordinary concepts test is the primary test of these tests of residency for both inbound and outbound residents. For inbound (entering Australia) and outbound (leaving Australia) individuals, the other tests can be applied should the ordinary concepts test not be applicable. The application of the other tests is different for inbound and outbound persons. In inbound cases, the 183 days test is used and the domicile test is not applicable. Alternately, where individuals are moving overseas or are ‘outbound’, the domicile test would be relevant.
The outcomes of several court cases have shown some more practical considerations when applying these cases also. When applying the 183 days test, it is not enough that an individual is physically present in Australia for greater than half the income year for them to be considered an Australian resident for that particular year. The individual must further demonstrate that their usual place of abode is not outside of Australia and they intend to take up residence in Australia. Notably, the term, ‘place of abode’ should be interpreted broadly enough to include an individual’s town or country.
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