Defining Tax Residency & Its Importance
Australia’s tax obligations hinge on whether you are a resident for tax purposes. Key tests include:
- Residency by domicile: Where you consider your permanent home to be.
- 183-day test: If you're physically present in Australia for 183 days or more.
- Superannuation test: If you're an employee with super contributions continuing post assignment.
If you are a tax resident, you’re taxed on worldwide income; non-residents are only taxed on Australian-source income.
Foreign Income, Foreign Tax Credits & CGT
- All foreign income (salary, contract, dividends) must be declared if you’re a resident. Don’t double-pay—Australia offers foreign income tax offsets for tax paid overseas.
- Capital Gains Tax still applies to foreign property and assets as “taxable Australian property”, especially under Division 855 for foreign resident CGT. (pwc.com.au)
- Proposed changes to foreign resident CGT regime will clarify and broaden assets subject to CGT, change testing periods, and introduce mandatory ATO notification for large disposals. (Still proposed.) (ato.gov.au)
Superannuation, Self-Employed & Internationals
- Australians abroad who retain super must understand whether their earnings inside super will face extra tax under Division 296 if their Total Super Balance exceeds $3m. (csc.gov.au)
- Self-employed or contract workers should monitor PAYG obligations; proposed instant deduction of $1,000 for work-related expenses may help reduce admin burdens. (pm.gov.au)
Practical Travel & Home Base Considerations
- Days in and out of Australia matter: travel logs can support residency status claims.
- Maintain clean documentation for foreign tax residency certificates and tax paid abroad.
- Use tax treaties: Australia has some, but not all, agreements—check whether the foreign jurisdiction is covered.
Action Checklist
- Before financial year end, assess whether you’re likely to cross the dividend or asset thresholds in upcoming reforms.
- Keep detailed records of all income, foreign or domestic, expenses, and travel to support claims.
- Where possible, consult an international tax specialist to understand the interplay of Australian amendments (such as CGT regime changes and Division 296) with your situation.
{Nomadic living is liberating—tax certainty can make it sustainable and profitable.}