Tax Resident vs Backpacker Tax
Residency for Australian tax purposes is not the same as your nationality or as simple as your Visa status.
Residency for Australian for tax purposes is based on the facts of your particular circumstances. You must demonstrate that your living and working arrangements are consistent with making Australia your home or live in Australia for six months or more within the tax year and intend to live in Australia permanently and not maintain a home in another country.
An Australian Resident Taxpayer is able to access the tax free threshold and various tax offsets that may not be available to Non-Residents and Backpackers, reducing their overall tax obligations.
There are two main factors we use to work out if you are an Australian resident if you are here for a working holiday, or visiting and working during your stay:
your purpose for being in Australia
how you actually live – do you have a settled way of life and developed routine and habit in Australia similar to how you lived before coming to Australia? This is different to being in Australia on a holiday or visit and working as you need.
The Australian Taxation Office states that:
“We also look at other factors when determining your purpose for being in Australia and where you actually live. No one factor will determine whether you are an Australian resident. It will depend on all the factors:
Your living arrangements – have you purchased or leased a place to live in Australia? This is different from leasing a place while you are on holiday and working as you need.
Your connections in the Australian community – have you joined a local club or group to be part of the local community, such as a sports team where you are expected to be regularly involved? This is different to joining a local club or group to meet locals and other travellers or to access cheap meals, gym facilities etc.
Where your valuable assets are located – do you have a bank account, investment, car, personal or household assets in Australia? This is different from having an Australian bank account to receive your wages, owning a car to get around Australia or acquiring some cheap furniture to furnish temporary accommodation.
Whether you have strong family ties in Australia – do you have a close relationship with a person who lives in Australia and are you in Australia to support or live with them? This is different from visiting family in Australia or traveling around Australia with your girlfriend or boyfriend on holiday.”
Don’t pay too much tax! Get in touch with Argyle Professionals to discuss your particular circumstances and ensure the correct treatment for your Australian tax.