Australian Tax Residency Test 2026: Are You a Resident for Tax Purposes?
Whether you are a resident of Australia for tax purposes is one of the most consequential questions in Australian personal tax — and the answer is not determined by your visa, your passport or your citizenship. The Australian Taxation Office uses four separate tests to determine your tax residency status, and the result affects whether you pay tax on your worldwide income or just your Australian income, whether you get the $18,200 tax-free threshold, and what tax rate applies to your earnings.
This guide explains all four ATO residency tests, what each one means in practice, how common migrant scenarios are treated, and why getting it wrong — in either direction — can be expensive.
Disclaimer: This article is general information only and does not constitute tax advice. Tax residency is determined on the facts of each individual situation. Consult a registered tax agent or visit the ATO for advice specific to your circumstances.
At a glance: resident vs foreign resident for tax
| Australian tax resident | Foreign resident for tax | |
|---|---|---|
| Income taxed | Worldwide income | Australian-sourced income only |
| Tax-free threshold | $18,200 — no tax below this | None — tax from dollar one |
| Tax rates | Standard Australian resident marginal rates | Foreign resident flat rates (32.5% up to $135,000) |
| Medicare levy | Applies (with some exemptions) | Generally does not apply |
| CGT on overseas assets | Applies on worldwide capital gains | Only on taxable Australian property |
| Investment income | Worldwide interest, dividends, rent taxable | Only Australian-sourced |
The difference is substantial. In the 2021–22 tax year, around 1.2 million individuals were classified as foreign residents for tax purposes and paid an average of 20–30% higher tax rates than residents — because they did not get the tax-free threshold.
For more on how the tax-free threshold applies to residents, see tax free threshold Australia 2025–26. For current Australian resident tax brackets see Australia tax rates 2026.
The four ATO residency tests
The ATO uses four main tests to determine whether an individual is a tax resident of Australia. Only one test needs to be satisfied for you to be a resident — but the ATO may assess multiple tests simultaneously. The tests are applied in order — if you pass one, you are a resident and the remaining tests are not needed.
Test 1: The resides test (ordinary concepts)
The first and most fundamental test asks whether you actually reside in Australia in the ordinary sense of the word. This includes factors like your physical presence, whether you have a home in Australia, where your family and work are based, and your long-term intentions.
There is no bright-line day count for this test — it is a holistic assessment. Factors the ATO considers include:
- How long you have been in Australia
- Whether your accommodation is permanent or temporary
- Whether your family is in Australia
- Whether your employment or business is in Australia
- Your intentions when you arrived — did you intend to settle, or is the stay temporary?
- Whether you have social ties, bank accounts, investments and assets in Australia
A person need not intend to remain permanently in a place to be found to reside there. The ATO treats every case on its own particular merits. Spending fewer than 183 days in Australia does not automatically make you a non-resident — if you maintain a home, have ongoing work or family ties, or plan to return, you may still be considered a tax resident under this test.
Practical example — new migrant arriving in January: Someone who arrives in January 2026 on a permanent partner visa, moves into a rental property, starts a job and opens Australian bank accounts is likely a resident under ordinary concepts from the date of arrival — even if they have been in Australia for fewer than 183 days by 30 June 2026.
Test 2: The domicile test
An individual is a resident of Australia under the domicile test if they have a domicile in Australia unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia.
What is domicile? Domicile generally means the country in which you were born unless you migrate to another country — then you adopt a domicile of choice. Under the Domicile Act 1982, a person acquires a domicile of choice in Australia if they intend to make Australia their home indefinitely.
For migrants, the domicile test works differently than for departing Australians:
For incoming migrants: Once you arrive in Australia with the intention to stay — particularly on a permanent visa — you generally acquire a domicile of choice in Australia. From that point, you are a resident under the domicile test unless you can demonstrate your permanent place of abode is outside Australia.
For departing Australians (expats): Australian-born individuals who move overseas generally retain their Australian domicile unless they actively establish a domicile of choice elsewhere. Establishing a domicile of choice overseas requires evidence — permanent residency in the new country, property ownership there, family settled there, no Australian property retained as a home, and clear written intent.
The permanent place of abode exception: Even if your domicile is Australia, you can be treated as a non-resident if your permanent place of abode is outside Australia. This is a higher bar than it sounds. A returning expatriate or new migrant who is present in Australia for more than 183 days in a tax year is generally considered a tax resident of Australia — unless the Commissioner is satisfied that their usual place of abode is outside Australia and that they do not intend to take up residence.
ATO case example — Emily working in Japan: Emily lives with a family in Japan during her time there and rents out her property in Australia. Emily is an Australian resident for tax purposes even though she is residing in Japan — because under the domicile test, her domicile is in Australia (as a resident who has lived in Australia and will generally retain a domicile here when absent overseas unless she chooses to permanently migrate), and her permanent place of abode remains Australia.
Test 3: The 183-day test
If you spend 183 days or more physically in Australia during the income year (1 July to 30 June), you are treated as an Australian tax resident — unless your usual place of abode is outside Australia and you do not intend to reside in Australia.
Key points about the 183-day test:
- Your presence in Australia does not need to be continuous. All the days you are physically present during the income year are counted — including the day of arrival and the day of departure.
- The test applies to the Australian financial year (1 July to 30 June) — not the calendar year
- 183 days is more than half of a standard year — approximately 6 months
- The rule is a bright line in one direction — hit 183 days and you are a resident for the year. But it is not automatic in every case — the rules also consider whether your usual place of abode is outside Australia.
The “usual place of abode” exception: The 183-day test does not apply if your usual place of abode is outside Australia and you do not intend to take up residence here. This is different from the domicile test — the phrase “usual place of abode” should not be given the same meaning as “permanent place of abode.”
ATO case example — Lars the travelling backpacker: Lars arrives in August 2024 and works various jobs while travelling around Australia for 12 months, staying in no place longer than 2 months. Although he is in Australia for more than 6 months, Lars will not satisfy the 183-day test because his usual place of abode is outside Australia.
Common trap — the family visit that crosses 183 days: You are based in Singapore, but your partner and children spend school holidays in Australia. You join them for Christmas, Easter and a mid-year break. Add it up carefully — many expats hit 183 days without realising it.
Test 4: The superannuation test
This test applies only to Australian Government employees working overseas who are members of certain superannuation schemes — specifically the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS). If you qualify, you are automatically a tax resident regardless of where you live. This test does not apply to the PSSAP or to private sector employees. For most migrants and expats, this test is not relevant.
How common migrant situations are classified
Newly arrived permanent resident
A new migrant who arrives in Australia on a permanent visa, moves into accommodation and starts working is almost certainly an Australian tax resident from the day of arrival — under the resides test and the domicile test (after acquiring an Australian domicile of choice). Even if they arrived in May and only spent 2 months in Australia before 30 June, they are likely a resident for the full period from arrival.
Tax implications: From the date of becoming a resident, worldwide income is taxable in Australia. The tax-free threshold of $18,200 applies from the date of residency commencement (pro-rated for part-year residents). For how the threshold is calculated for part-year residents, see tax free threshold Australia 2025–26.
SC 482 or SC 485 temporary visa holder
A temporary resident for tax purposes is broadly an individual who holds a temporary visa granted under the Migration Act 1958. However, holding a temporary visa does not automatically make you a foreign resident — tax residency is determined by the four tests above, not your visa type.
A skilled worker on a SC 482 Skills in Demand visa who lives and works full-time in Australia, rents accommodation and has family in Australia is typically assessed as an Australian tax resident — despite holding a temporary visa. They would be subject to resident tax rates and the tax-free threshold.
By contrast, a worker who comes to Australia on a short-term contract, lives in serviced apartments, returns home regularly and has no intention of settling would likely be classified as a foreign resident.
The key is the totality of circumstances — not the visa label on the passport.
Working holiday maker (SC 417/462)
Working holiday makers are specifically legislated as foreign residents for tax purposes regardless of the four-test outcome. The 15% WHM tax rate with no tax-free threshold applies to all 417 and 462 visa holders. For the full WHM tax treatment, see working holiday visa tax Australia 2025–26.
Partner visa holder on Bridging Visa A
Someone who has lodged the SC 820/801 onshore partner visa and is living in Australia on a Bridging Visa A is generally assessed as an Australian tax resident under the resides test — they are physically present, have accommodation, family connection and intention to remain.
Australian returning from overseas
An Australian who has been working abroad and returns to live in Australia re-establishes tax residency from the date of return. When you become an Australian tax resident after a period of non-residency, your overseas assets (shares, RSUs, foreign property) get a new Australian cost base set at their market value on the date your residency commences. If you do not document this on the day, you face Australian CGT on the entire history of those assets, not just the gains earned while you were resident.
The proposed new tax residency framework
The current four-test system has been under review. In 2019 the Australian Government accepted the Board of Taxation’s recommendation to replace this structure with a simpler, more objective framework.
The proposed primary test would be a simple bright-line test: a person who is physically present in Australia for 183 days or more in any income year would automatically be an Australian tax resident. Individuals who do not meet the primary test would be subject to secondary tests based on a combination of physical presence and measurable, objective criteria — such as whether an individual has the right to reside permanently in Australia, Australian accommodation, family in Australia, or Australian economic connections.
Despite the substantial interim period, the Government has not formally responded to consultation feedback and there has been no mention of any changes in subsequent Federal Budgets. In practice, July 2026 is now the earliest prospective date for any change to take effect — and even this is uncertain. The current four-test system remains in place for the 2025–26 tax year.
What tax rates apply to each residency status?
Australian tax residents
| Income | Tax rate |
|---|---|
| $0 – $18,200 | 0% |
| $18,201 – $45,000 | 19% |
| $45,001 – $120,000 | 32.5% |
| $120,001 – $180,000 | 37% |
| $180,001+ | 45% |
Plus the 2% Medicare levy (with some visa-based exemptions — see Medicare levy for visa holders 2025–26). For full bracket details see ATO tax brackets 2026–27.
Foreign residents for tax
| Income | Tax rate |
|---|---|
| $0 – $135,000 | 32.5% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
No tax-free threshold. No Medicare levy (in most cases). No Low Income Tax Offset.
The difference between a resident earning $50,000 and a foreign resident earning $50,000 is approximately $7,500 in additional tax — a significant amount.
Record keeping: why it matters
As a matter of practice, given that incoming and outgoing stamps are no longer placed in passports, all expats and frequent travellers should maintain a log containing dates of entry and exit from Australia and flight numbers. This can be important information in terms of determining residency — and the ATO has access to precise data from immigration records.
Keep records of:
- All entry and exit dates from Australia (including the day itself)
- Accommodation arrangements — whether permanent, temporary or shared
- Employment contracts showing where work was performed
- Family location and living arrangements
- Any assets retained in Australia or disposed of during the period
The ATO can and does request this information when it questions residency status. Documentary evidence is far more persuasive than reconstructed dates from memory.
Lodging your tax return correctly
If you are uncertain about your residency status, you must make a determination before lodging your tax return — because the return itself requires you to declare whether you are a resident or foreign resident.
Use the ATO’s residency tool to assess your situation based on your specific circumstances. If your situation is complex — you changed residency status mid-year, you were overseas for extended periods, you have assets in multiple countries — consult a registered tax agent before lodging.
For the full guide to lodging your Australian tax return, see how to lodge your first Australian tax return 2026.
For new arrivals who also need to set up their TFN, super and bank account, see the TFN, ABN and super setup guide for migrants.
If you are making Australia home after arriving on a skilled or partner visa, Lifehints covers practical guides on settling into Australian life — from finding a rental to managing household costs.
Frequently asked questions
Does my visa type determine my tax residency?
No. Tax residency is determined by the four ATO tests described above — not by the type of visa you hold. A temporary visa holder can be a tax resident. A permanent visa holder who spends most of the year overseas may be a non-resident. The ATO looks at the substance of your situation, not the label on your visa.
Can I be a tax resident of two countries simultaneously?
Yes — this is called dual tax residency. Australia has tax treaties with many countries that include tie-breaker rules to determine which country has primary taxing rights when a person is a tax resident of both. If you are a dual tax resident, the treaty determines how your income is taxed and prevents double taxation.
What happens when I become a tax resident mid-year?
Your tax position is split at the date of residency commencement. Resident rates and the tax-free threshold apply from that date. Foreign resident rates apply to income earned before that date. The ATO calculates this split when you lodge your return and declare your period of residency.
Does time on a student visa count toward residency?
It can — if you satisfy the resides test or the 183-day test during that time. A student who lives full-time in Australia, has accommodation, studies and has no usual place of abode outside Australia may well be an Australian tax resident during their studies. The visa type itself is not determinative.
I worked overseas for two years and am returning to Australia — when does my residency restart?
Generally from the date you return to Australia and re-establish residence — which under the resides test is usually the day of arrival if you are moving back permanently. At that point your overseas assets receive a new Australian cost base for CGT purposes. Consult a tax agent before returning to document your asset values on the date of return.
This article is general information only and does not constitute tax advice. Tax residency is determined on the specific facts of each individual’s situation. Consult a registered tax agent or visit the ATO for advice specific to your circumstances.
Sources: ATO — your tax residency | ATO — residency tests | ATO — TR 2023/1 Income tax residency tests for individuals | ATO — 183-day test
