Why the label matters
Tax residency decides which rate table applies, whether you get a tax-free threshold, whether the Medicare levy applies, and how capital gains on property are treated. Foreign residents pay 30% from the first dollar, cannot generally claim the main residence exemption on a sale, and face 15% withholding when selling. The overview of tax on Australian property from overseas lists those consequences together.
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The four tests
Resides test. The ATO applies the ordinary meaning of "reside": to dwell permanently, or for a considerable time, in a settled or usual abode. It looks at how long you are physically present, your intention, how you behave while in Australia, family and business or employment ties, where you keep and maintain assets, and your social and living arrangements. Six months is treated as a considerable time, but the ATO says less than six months does not automatically make you a foreign resident and more than six months does not automatically make you a resident. Nationality counts for very little, though it can help in borderline cases.
Domicile test. Domicile is your permanent home in law, and you have only one at a time. If your domicile is in Australia you are a resident, unless the ATO is satisfied your permanent place of abode is outside Australia. "Permanent" here means ongoing rather than temporary or transitory, not forever. The ATO says this test usually applies where an Australian resident goes to work overseas for an extended period: a long absence may fail the resides test, and someone who has always lived in Australia usually keeps an Australian domicile while abroad unless they choose to migrate permanently. The ATO looks at how long you intend to stay overseas, whether you have set up a home there, whether you keep a residence in Australia, and your family and financial ties.
183-day test. If you are in Australia for more than half the income year, continuously or on and off, you are a resident. The exception applies only if both of these are true: your usual place of abode is outside Australia, and you have no intention of taking up residence here. Every day physically in Australia counts, including arrival and departure days. The test runs on the income year (1 July to 30 June), not the calendar year.
Commonwealth superannuation test. You are a resident if you are a contributing member of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS). Your spouse and any children under 16 are then residents too. The test does not apply to members of the PSS accumulation plan. It was designed for Australian government employees posted overseas, and the schemes are now closed to new members.
How the ATO's examples come out
The ATO publishes worked examples for people who move abroad. They are illustrations, and a real result depends on all the facts.
| Person | Facts the ATO gives | ATO outcome |
|---|---|---|
| Emily | Teaches in Japan. Domicile is Australia and her permanent place of abode remains in Australia | Australian resident |
| Gerhardt | Returns to Sweden for a two-year contract. Spends one month in Australia, keeps his Swedish home and car, visits Australia once in nine months | Foreign resident (failed all the tests) |
| Bronwyn | Takes a three-year overseas job, sets up a home overseas and rents out her Australian property | Foreign resident, because her permanent place of abode is outside Australia |
Bronwyn's case answers a common question. Owning an Australian property did not stop her becoming a foreign resident.
The ATO residency tools
The ATO offers two decision tools on its "work out your residency status" page: one for people who have come to Australia, and one for people who have left or plan to leave. Each takes about 5 to 10 minutes. The ATO describes the results as guidance only, based on the information you enter, and notes that residency can also depend on tax treaties. The ATO ruling TR 2023/1 (income tax: residency tests for individuals) sets out how the ATO applies the tests.
Part-year residents
If your status changes during the income year, the ATO says to answer "yes" to the resident question on your return. You get a pro-rata tax-free threshold for the months you were a resident, and from the date you cease to be a resident you do not need to return foreign-source income.
Keep reading
- Foreign resident tax rates for 2026-27: what the ATO charges non-residents
- Tax for Australian expats: what the ATO expects while you live overseas
- Main residence exemption for expats and foreign residents: what the ATO rules say
- Double tax agreements and Australian property: how treaties treat rent and sale gains
- Do Australian expats pay the foreign buyer stamp duty and land tax surcharges?
- HECS-HELP repayments when living overseas: what the ATO requires and what it means for a home loan
Frequently asked questions
Can an Australian citizen living overseas be a foreign resident for tax?
Yes, it can happen. Citizenship is not one of the four tests, and the ATO says nationality counts for very little under the resides test. A person who fails all four tests is a foreign resident, as the ATO's Gerhardt and Bronwyn examples show. Whether that fits a particular person depends on the full pattern of their life, which is why the ATO tool and a tax agent matter.
Does keeping a house in Australia keep me a resident?
Not on its own. In the ATO's Bronwyn example, she owned an Australian property and rented it out, yet she was a foreign resident because her permanent place of abode was outside Australia. Under the resides test, the ATO weighs where you keep assets alongside time spent, family ties and intention.
Is there a number of days I can be away?
The ATO does not give a single cut-off for leaving. The 183-day test counts days spent in Australia, and the resides test looks at the whole pattern of your life, with six months treated as a considerable time but not decisive.
What if two countries both treat me as a resident?
The ATO says tax residency can depend on the tax treaties between Australia and other countries, so the text of the treaty with your country matters. The ATO's decision tools add that results are guidance only and rest on the information you enter. See double tax agreements and Australian property for what to check, and a tax agent who knows both systems for a firm answer.
Sources
- Residency tests, Australian Taxation Office
- The resides test, Australian Taxation Office
- The domicile test, Australian Taxation Office
- The 183-day test, Australian Taxation Office
- The superannuation test, Australian Taxation Office
- Australian and foreign resident examples, Australian Taxation Office
- Work out your tax residency, Australian Taxation Office
- Your tax residency, Australian Taxation Office
Checked 7 October 2026.
Expat Finance is an independent guide. It is not a lender, mortgage broker or credit provider, it does not hold an Australian credit licence, and it does not give credit, legal, tax or migration advice. It is not affiliated with any bank, the ATO or the Foreign Investment Review Board. General information only, not legal, tax, migration or financial advice.