Australia is one of the few countries in the world that operates a worldwide taxation system. If you're an Australian tax resident, you're required to declare income from anywhere in the world to the ATO — including rental income from Hong Kong, investment earnings from China, and so on. Figuring out whether you're an Australian tax resident has a direct impact on your tax bill.
Tax resident ≠ resident under immigration law
This is where people get confused the most.
- Resident under immigration law: holding PR or citizenship = Australian resident. This is based on your visa status.
- Tax resident: this is about how deep your "ties" are to Australia — regardless of what visa you hold. You could be a PR but not a tax resident, or hold a student visa yet still be considered a tax resident.
The ATO's four tests
The ATO (Australian Taxation Office) uses four tests to determine whether you're a tax resident:
1. The Resides Test
Do you have a "usual place of residence" in Australia? This is the first test the ATO looks at. If you've rented a place in Australia, your kids go to school here, and you spend more than 9 months a year in the country — you've likely satisfied the Resides Test and are a tax resident.
2. The 183-Day Test
If you've physically lived in Australia for more than 183 days in a financial year (1 July to 30 June the following year) → you're deemed a tax resident. Unless you can prove your "usual place of residence" is overseas (for example, your spouse and children live in Hong Kong and you have a job there).
Common misconception among Chinese-Australians: "I only spend 5 months a year in Australia, so I'm not a tax resident." Wrong. The Resides Test takes priority over the 183-Day Test — if you own a home in Australia and your kids attend school here, the ATO can still deem you a tax resident even if you're here for fewer than 183 days.
3. The Superannuation Test
This applies to Australian government employees posted overseas — it doesn't apply to most people.
Common scenarios for new migrants
Scenario A: PR just granted, still working in China, planning to move to Australia in two years
Until you actually move to Australia, you're not a tax resident. Your employment income from China doesn't need to be reported to the ATO.
But the moment you physically relocate to Australia and establish a usual place of residence (renting or buying a home, enrolling your kids in school), you become a tax resident from that point on.
Scenario B: PR with a house in Australia, but working back in Hong Kong/China
This is a grey area. The key question: where is your "usual place of residence" really?
- If your spouse and children live in Australia and you return 3–4 times a year → the ATO will likely deem you a tax resident
- If you're living in China on your own, your spouse and children are with you there, and your Australian property is rented out → you may not be a tax resident
Scenario C: International students
International students are generally considered non-tax residents — because there's no intention to establish a usual place of residence. However, if your course runs longer than 6 months, you work while in Australia, and you spend more than 183 days here — you may need to lodge as a tax resident.
What becoming a tax resident means
- Worldwide income must be declared (including overseas rent, investment income, and foreign employment income)
- Overseas assets may need to be reported (if you hold foreign assets worth more than $50,000 AUD)
- CGT (Capital Gains Tax) applies to the sale of assets worldwide
- You're eligible for Australia's tax-free threshold ($18,200)
The benefits and costs of being a non-tax resident
- You only pay tax on Australian-sourced income (such as Australian wages and rental income)
- No tax-free threshold — every dollar you earn is taxed, starting at 32.5%
- No 50% CGT discount on Australian assets
- Interest on Australian bank accounts is hit with a 10% withholding tax
What you should do
If your situation is clear-cut (e.g. you've just arrived in Australia, working full-time, renting, kids in school), you're obviously a tax resident — just lodge your tax return as normal.
If you're in a grey area (living across two countries, family split between here and overseas, unsure where your usual place of residence lies), it's worth getting a professional opinion from a Registered Tax Agent. It'll cost around $300–500, but it could save you tens of thousands in back taxes and penalties if the ATO ever audits you down the track.