The most important question you need to ask yourself as an Australian Expat is – Am I an Australian Resident For Tax Purposes? In this article I discuss an example provided by the ATO regarding an engineer on assignment in the Philippines for two years.
One of the most relevant tests that Australian Expats need to satisfy if they want to be considered a non-resident for Australian tax purposes is to demonstrate that they have established a permanent place of abode overseas. This was key in determining the residency of the engineer in the example below.
Australian Expat Case Facts
An engineer was sent by his Australian employer to the Philippines on a project assignment for a minimum period of 3 to 4 years and he decided to relocate his family to the Philippines. As it turned out, the assignment was cancelled after two years and the engineer returned to Australia with his family. It was always his intention to return to Australia at the end of the project.
He retained his Australian home and rented it out. When arriving in the Philippines, the engineer and his family initially resided in a hotel and apartment for a short period. Later, he sub-leased a house which the family lived in until their return to Australia.
Not an Australian Resident For Tax Purposes
Having regard to the nature and quality of his use of the place of abode in the Philippines, the engineer was considered to have established a permanent place of abode outside Australia, and was thus determined to be not an Australian resident for taxation purposes during the period of his overseas assignment.
In determining whether or not you have established a permanent place of abode outside of Australia, there are a number of factors that need to be considered. These are detailed in my blog article here. In any case, you should seek professional advice in determining whether you are an Australian resident for tax purposes or seek a private tax ruling from the ATO. For more information on the implications of your tax residency please download my free ebook by entering your details below.
Please share your experiences in determining your tax residency. Have you been audited? What issues have you faced?
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.