How Residency Status Affects Taxation

Australian Residents

• Pay tax on worldwide income.
• Access the tax-free threshold, meaning no tax on the first $18,200 earned.
• Eligible for most tax offsets and rebates.

Non-Residents

• Pay tax only on Australian-sourced income.
• Higher tax rates apply, starting at 32.5% from the first dollar earned.
• Not eligible for the tax-free threshold or most offsets.

Determining Your Residency Status

• Residency depends on your visa type, time spent in Australia, and whether you intend to stay long-term.
• The ATO uses several tests to assess residency, including the resides test, domicile test, and 183-day test.

Common Scenarios

• Working Holiday Makers: Taxed at 15% on the first $45,000.
• Expats: May retain residency status if they maintain ties to Australia, such as property or family.

Understanding your residency status is essential for filing correctly. Use the ATO’s Residency Calculator or consult with a professional if unsure.

The Cado Tax app makes tax filing easier by helping you navigate residency-specific obligations and benefits.

FAQs

How can I check if I’m a resident for tax purposes?

Use the ATO’s residency calculator or consult a tax professional for clarity based on your circumstances.

Do I need to declare overseas income if I’m a resident?

Yes, Australian residents must report all worldwide income, including foreign employment and investments.