Covid-19 Pandemic lockdowns have caused a number of non-residents staying longer than intended, but does this mean they will be counted as a resident for tax purposes?
The ATO has recently updated its website guidance for taxpayers, noting that if a non-resident stays in Australia longer then expects there may be implications, you may need to lodge an Australian tax return if you earn assessable income from an Australian source. This means any salary or wage income that is assessable in Australia.
* The following are information from the ATO website
Not an Australian resident, temporarily in Australia
Question: I am not an Australian resident. I am staying in Australia for longer than I expected because of COVID-19. What are my Australian tax obligations?
Answer: If you are not an Australian resident for tax purposes, you will be assessable only on income from an Australian source subject to the application of any applicable Australian double tax agreements (see the question on double tax agreements).
You may need to lodge an Australian tax return if you earn any assessable income from an Australian source. This includes salary or wage income that is assessable in Australia(see the questions on employment income concerning leave and salary and wages below). Your Australian tax obligations will otherwise generally remain unchanged.
You may need to lodge an Australian tax return if you become an Australian resident for tax purposes. As an Australian resident all Australian-sourced income, including salary or wage income and investment income, will be assessable. All foreign-sourced income will also be assessable unless you are an Australian resident who is a temporary resident.
Question: Will my tax residency for tax purposes change as a result of me returning to Australia due to COVID-19?
Answer: Whether you are a resident for tax purposes in Australia is a question of fact that requires consideration of your circumstances.
If you are here temporarily for some weeks or months because of COVID-19 then you will not become an Australian resident for tax purposes as long as you:
- usually live overseas permanently
- intend to return there as soon as you are able to.
However, the tax residency issue may be more complicated if you:
- end up staying in Australia for a long period
- do not plan to return to your country of residency when you are able to do so.
Here is the link for more information on this topic
If you would like to find out more or are looking for a new accountant, please contact us at Dolman Bateman and one of our expert accountants will be able to help you.
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