Quick answer: Your tax residency is decided by four ATO tests — resides first, then domicile, 183-day and Commonwealth superannuation. Meet any one and you’re an Australian resident: taxed on worldwide income at resident rates (nil to 45%, plus 2% Medicare levy), with the $18,200 tax-free threshold. Miss all four and you’re a foreign resident: taxed only on Australian-sourced income at 30% from the first dollar, no threshold, no Medicare levy. Residency can start or stop mid-year, and in the year you leave, the ATO treats you as if you sold most of your CGT assets at market value. What matters is the tests — not your citizenship, visa or passport.
The four tests, in the order the ATO applies them
The ATO works through the tests in a fixed order, and the first is where most cases are decided. Meet a test and you’re a resident — you don’t check the rest.
1. The resides test (the primary test)
“Resides” means living here in the ordinary sense — dwelling permanently, or for a considerable time, with your settled or usual abode. The ATO weighs the whole of your life, not just your location on a given day: physical presence, intention and purpose, family, business and employment ties, where your assets are, and your social and living arrangements.
The ATO’s guidance says six months is a considerable time when judging whether your behaviour looks like residing here — but it’s explicitly not a bright line. More than six months doesn’t automatically make you a resident, and less than six months doesn’t automatically make you a foreign resident. It’s time plus behaviour. Pass this test and the other three don’t matter.
2. The domicile test
This is the one that catches Australians who go overseas. Your domicile is your permanent home under law — for most Australians born here, that’s Australia. You’re a resident under this test unless the Commissioner is satisfied your permanent place of abode is outside Australia.
“Permanent place of abode” doesn’t mean buying a villa — after the Harding decision it can mean settling into a country or town in a permanent way. But a short posting won’t do it: the ATO’s rule of thumb is that an intended stay of under two years is unlikely to establish a permanent place of abode overseas. And in a 2026 Federal Court decision (Quy), an Australian working overseas long-term — with a foreign residence permit and overseas accommodation — was still held resident because his family, property and financial ties all pointed back to Australia.
The domicile test is why “I’ve moved to Singapore, I’m a non-resident now” is the most dangerous sentence in expat tax: if your life is still anchored here, it keeps you a resident on worldwide income.
3. The 183-day test
If you’ve actually been in Australia for more than half the income year — continuously or in chunks — you’re a resident unless your usual place of abode is outside Australia and you don’t intend to take up residence here. This test mostly catches long-stay visitors: in Australia for seven months but with your home and life in another country? The exception may save you. Backpackers on working holiday visas are dealt with separately (see the FAQ).
4. The Commonwealth superannuation test
You’re a resident if you’re a contributing member of the Commonwealth Superannuation Scheme (CSS) or the Public Sector Superannuation Scheme (PSS) — or the spouse or child under 16 of someone who is. This catches diplomats, ADF personnel and some public servants posted overseas.
The decision flow: which test decides your case
- Do you live in Australia in the ordinary sense? Home, family, job, daily life here → resident (resides test). Stop.
- Is your domicile in Australia? If yes: have you genuinely set up a permanent place of abode overseas? If not → resident (domicile test). Stop.
- Have you been in Australia for more than half the income year? If your usual home is overseas and you don’t intend to stay → foreign resident. Otherwise → resident (183-day test).
- CSS/PSS member (or spouse/child of one)? Yes → resident. No, and every test above failed → foreign resident.
One overlay sits on top of this: temporary residents (typically temporary visa holders, e.g. 482 visas). You can be an Australian tax resident and a temporary resident, with most foreign income and gains exempt — see the scenario below.
Four worked scenarios
Sarah moves to London on a 2-year contract. She rents out her Sydney unit and takes the posting with her partner. She fails the resides test but the domicile test keeps her: a 2-year intended stay is unlikely to establish a permanent place of abode overseas, and her property, accounts and ties are still Australian. Verdict: still a resident. She declares her UK salary and claims a foreign income tax offset for UK tax paid.
Tom works FIFO rotations in Papua New Guinea. He lives in Perth with his family, 3-weeks-on/3-weeks-off in PNG. Employment overseas doesn’t move your abode — his home, family and life are here. Verdict: resident (resides test). His PNG wages are declared in Australia with an offset for PNG tax paid.
Priya finishes her degree and returns to India mid-year. While studying she was a resident; leaving permanently for a Mumbai job with no Australian home, she stops being one from her departure date. Verdict: part-year resident — split-year rules apply, plus a deemed CGT disposal on her shares.
Arjun, on a 482 visa, returns to India after 18 months in Sydney. He was a resident and a temporary resident: his Australian salary was taxed, but his Indian dividends and gains stayed off his Australian return. On departure there’s no deemed CGT disposal — a concession departing permanent residents don’t get — and he can claim his super as a departing Australia payment.
Resident vs foreign resident: what it actually costs in 2026-27
Residency is a different tax scale, not just a label. Residents get the $18,200 tax-free threshold and pay the 2% Medicare levy; foreign residents pay a flat 30% from the first dollar with neither.
| Australian resident | Foreign resident | |
|---|---|---|
| What’s taxed | Worldwide income | Australian-sourced income only |
| Tax-free threshold | $18,200 | None |
| Rates 2026-27 | Nil / 15% / 30% / 37% / 45% | 30% to $135,000, 37% to $190,000, 45% above |
| Medicare levy | 2% (most residents) | Exempt |
| CGT | Worldwide assets (50% discount after 12 months) | Australian property only; no full 50% discount (assets acquired after 8 May 2012) |
Worked example 1 — $80,000. Resident: $4,020 plus 30% of the $35,000 above $45,000 = $14,520, plus 2% Medicare ($1,600) = $16,120. Foreign resident on the same Australian income: 30% of $80,000 = $24,000, no Medicare levy. Difference: $7,880 a year for getting the residency call wrong.
Worked example 2 — $150,000. Resident: $31,020 plus 37% of the $15,000 above $135,000 = $36,570, plus $3,000 Medicare = $39,570. Foreign resident: 30% of the first $135,000 ($40,500) plus 37% of $15,000 ($5,550) = $46,050. Difference: $6,480 a year.
Plug your own numbers into the income tax calculator — but remember the calculator assumes resident rates. Foreign-resident rates are a separate calculation (no threshold, no Medicare levy).
The third category: temporary residents
This is the concession most people have never heard of. If you’re an Australian resident for tax purposes but hold a temporary visa (the classic case: 482 visa holders), you’re a temporary resident: most foreign-sourced income and capital gains don’t have to be declared, and CGT applies only to taxable Australian property. Australian salary and investments are still taxed normally. The concession dies the day you get permanent residency, so time any overseas asset sales before then. The foreign income guide has the full declaration rules.
Leaving Australia: the deemed disposal trap (CGT event I1)
This is the surprise that ambushes departing residents. When you stop being an Australian resident, the ATO treats you as if you disposed of your CGT assets at market value on the day you left — everything except taxable Australian property (your Australian real estate and business assets stay in the CGT net without a deemed sale). It’s CGT event I1.
Worked example. You cease to be a resident on 15 October 2026 holding $50,000 of ASX shares with a cost base of $30,000. You’re deemed to have sold them: a $20,000 capital gain. Held more than 12 months while always a resident, so the 50% CGT discount applies — $10,000 added to your assessable income in your departure-year return. Your Brisbane rental property is not deemed sold; CGT waits until you actually sell, with the discount apportioned for your resident periods — and since 1 October 2026 the foreign-resident CGT rules are broader still.
You do get a choice: you can disregard the deemed disposal (defer it), but those assets then become taxable Australian property — the ATO taxes them when you eventually sell, at non-resident rates, with only an apportioned discount. Deferring usually only makes sense if the deemed gain is large and you expect to return. And temporary residents skip this entirely: no deemed disposal when they leave.
One more thing that catches departing owners: foreign residents generally can’t claim the main residence exemption on property sold after 30 June 2020 (outside a narrow life-events test). Selling an Australian home from overseas? Read the non-resident property CGT guide before you sign anything.
Coming back: what changes when you return
Residency is symmetric. The day you resume being an Australian resident — you move back, settle in, and meet the resides or domicile test again — you’re deemed to have acquired your CGT assets at their market value on that date (CGT event I2), except pre-CGT assets and taxable Australian property.
This fresh cost base is usually good news: growth while you were a foreign resident is washed out of your Australian CGT calculation. Save evidence of values at that date — broker statements, valuations — because reconstructing them later is miserable. And the part-year mechanics apply in reverse: from your return date you’re taxed on worldwide income at resident rates, with a pro-rata tax-free threshold.
Common mistakes
- “I moved overseas, so I’m a non-resident.” The domicile test doesn’t care about your flight booking. If your permanent place of abode hasn’t moved, you’re still a resident — on your worldwide income.
- “I’m under 183 days, so I’m safe.” The 183-day test is one of four. The resides and domicile tests need no day count at all.
- Forgetting the deemed CGT disposal. Departing residents discover CGT event I1 at tax time, when shares they never sold produce a real tax bill.
- Answering the return wrong in the changeover year. If residency changed mid-year, answer “yes” to Are you an Australian resident?, give the change date and the months. Get this wrong and the return miscalculates.
- Not claiming the foreign income tax offset. Resident on worldwide income but already taxed overseas? The offset stops double tax — but you have to claim it.
- Assuming citizenship or a visa decides it. A citizen can be a foreign resident; a visa holder can be a tax resident. The ATO doesn’t use Home Affairs’ rules.
- Selling the family home from overseas and expecting the main residence exemption. For sales after 30 June 2020, foreign residents generally can’t claim it.
Tips before you move (either direction)
- Decide your residency-change date before you lodge. It’s the date your circumstances changed, not 30 June — it drives your part-year threshold, Medicare exempt days and deemed disposal values.
- Value your CGT assets at the change date. Shares, crypto, funds — save statements. The deemed disposal (or acquisition) uses market value that day.
- Keep a travel and ties file. Entry/exit dates, overseas lease or purchase contracts, employment contracts, where family lives. The ATO can request this when it questions a residency call.
- Run the disregard choice past an adviser. Deferring the deemed disposal keeps assets in the Australian CGT net — fine if you’re returning, expensive if you’re not.
- Check the tax treaty. If the other country also claims you as a resident, the treaty tie-breaker decides what each country taxes. Australia has treaties with 40+ countries.
- Claim your Medicare levy exemption days. Foreign-resident days are exempt days on your return — see the Medicare levy guide for the exemption categories.
FAQ
I’m an Australian citizen working in Dubai. Am I still a tax resident?
Possibly — citizenship is irrelevant to the tests. If your domicile is Australia and you haven’t established a permanent place of abode overseas, the domicile test keeps you a resident and Australia taxes your worldwide income. Dubai’s zero income tax just means there’s no foreign tax to offset.
I left Australia in October. Am I a resident or non-resident for that year?
Both — it’s a part-year. Answer “yes” to Are you an Australian resident?, give the date you stopped and the months you were resident. Resident rates apply, your tax-free threshold is pro-rated ($13,464 plus $4,736 × months resident ÷ 12 — 4 months gives about $15,043), foreign income after your departure isn’t declared, and your non-resident days are Medicare levy exempt days.
Do I really pay CGT on shares I didn’t sell when I leave?
Yes — the deemed disposal (CGT event I1) uses market value on your departure date, except taxable Australian property. The full 50% discount is available on the deemed gain if you were always a resident while holding the asset. You can disregard it, but then the assets become taxable Australian property and are taxed when you actually sell. Temporary residents are exempt.
I’m on a 482 visa. Do I declare my overseas income?
Generally no — as a temporary resident, most foreign-sourced income and capital gains stay off your Australian return. Your Australian salary and investments are still taxed normally. The concession ends with permanent residency, so time any overseas asset sales before then.
I backpacked around Australia for 8 months. Am I a tax resident now?
Working holiday makers are generally treated as foreign residents even after long stays, and special working holiday maker rates apply (no $18,200 threshold). The 183-day test’s exception — usual home overseas, no intention to stay — protects the genuine traveller. But if you’ve settled into one place and one job, get advice: behaviour can still pull you into residency.
Wrap-up
Set your change date, value your assets that day, and start with the ATO’s residency tool — then get advice before the move, not after the assessment. The full guidance is at ato.gov.au — your tax residency and how changing residency affects CGT.
