Relocating overseas is an exciting milestone, but tax residency is often overlooked in favour of more immediate priorities such as visas, employment and accommodation. Understanding your Australian tax residency status is essential to ensuring your tax affairs remain compliant.
A common misconception is that leaving Australia automatically means you cease to be an Australian tax resident. In practice, Australian tax residency is determined by your overall circumstances, and no single factor is conclusive. The ATO considers a range of factors including your intentions, living arrangements, family and economic ties and the permanence of your relocation. These factors are assessed collectively under the relevant residency tests to determine whether you continue to be an Australian tax resident.
This distinction is important because Australian tax residents are generally taxed on their worldwide income, whereas foreign residents are generally taxed only on Australian-sourced income, subject to any applicable double tax agreements. Therefore, correctly determining your residency status is essential to ensuring your tax affairs are appropriately managed.
Ceasing to be an Australian tax resident may also trigger additional tax consequences, including a deemed disposal of certain assets at their market value for CGT purposes. This generally does not apply to assets that remain within the Australian tax net, such as Australian real estate. A change in residency can also affect existing business structures, including trusts and self-managed superannuation funds, where residency requirements can affect ongoing compliance.
Australia’s tax residency rules are complex, and the consequences of misclassification can be significant. Seeking professional advice before relocating can help you understand your Australian tax obligations, avoid unexpected tax outcomes and ensure your affairs are managed appropriately.
This article was authored by Olivia Russell, an Accountant within HLB Mann Judd Perth’s Tax Advisory division. It was first published in the Spring 2026 issue of Client Alert.