ATO Says You Are A Tax Resident?

ATO Says You Are A Tax Resident?

Are you living and working overseas, but the Australian Taxation Office says you remain a resident of Australia?

So you still need to report your foreign income back to Australia, for the ATO to take a bite out of your income.

Sure you may be able to offset foreign tax paid to reduce the Australian tax.  But you might still be paying catch-up Australian tax, Medicare levies (including the Medicare Levy Surcharge) and private health insurance.

Depending upon your circumstances, especially if you have a valuable home in Australia (see Expatriate Homes At Risk of Tax Time Bomb) it might even suit you to be a tax resident, and save a lot of capital gains tax. Even if you have to pay other taxes!

For some, these taxes could be good value if they save a much more valuable CGT main residence exemption.

In one court case reported on 22 February 2019, a taxpayer had left to work overseas but his wife and children stayed in Australia, where he returned regularly and for protracted periods until the taxpayer’s marriage broke down.

So the taxpayer spent more time overseas with his new partner, and continued working for the same employer.

The ATO believed he was still a tax resident.

They went off to court and the ATO won – the taxpayer was an ongoing tax resident.

The taxpayer appealed and the court found the lower court was wrong, in particular as to what a ‘permanent place of abode’ is, as part of its consideration of ‘residency’.

So in the appeal case (Harding v Commissioner of Taxation [2019] FCAFC 29 (22 February 2019)), the court overturned the earlier decision.

The taxpayer has won, finally, and was accepted as losing his residency.  He was now a non-resident.

What is your situation?  Are you living and working overseas, and paying tax back in Australia?

If you want a tax professional to be focused and dedicated to take care of your taxation affairs, pop through a message to us today.

Tax Services Australia has been helping Australians with quality, independent and reliable taxation advice since 2001.If you have run into problems with the ATO regarding your residency, or wish to proactively plan for it to seek out the right tax opportunities available in your situation, contact us today.

Worry Over For Non-Residents?

Worry Over For Non-Residents?

Tax Traps for Aussie Expats

Tax Traps for Aussie Expats