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“My wife and kids are considering heading back to Australia while I stay on in Singapore to work and commute back and forth. Will I be taxed as an Australian Resident from when they move back?”
The Australian Tax Residency rules were written back in 1936 when international travel wasn’t as easy as booking a cheap Scoot flight. The law writers wouldn’t have considered a family where the bread winner could work in one country and stay weekends in another. Accordingly, the residency rules are not that friendly for this situation and will generally treat the commuting taxpayer as an Australian tax resident, and tax them on their Singapore income, less any tax paid in Singapore. However it’s important to seek guidance on your specific circumstances as everyone is different.
The residency rules are complex, and a lot of the current treatment is based on case law. Recent cases including “Harding”, “The Engineering Manager” and “Dempsey” have changed the landscape and improved some of the grey lines.
When faced with a review of your tax residency, it’s important to note that there are four tests to work through; Resides Test, Permanent Place of Abode Test, 183 Day Test, and Commonwealth Superannuation Fund Test. Clients frequently assume because they are out of Australia for 183 days a year, that they are not a resident, but this isn’t the only test to consider.
The Resides Test looks at the ordinary meaning of residing in Australia, in accordance with the Oxford dictionary. It takes into account a wide range of factors, such as your day-to-day life, quality of presence and time, strong family ties, a break in your habits from the point of a change in residency, and long term intentions.
The Permanent Place of Abode Test will deem you a resident of Australia unless you have a permanent place of home overseas. This could be a rented apartment on a long-term lease, however in Harding’s case, regularity in the same country can now be considered.
The 183 Day Test will deem you an Australian tax resident if you are physically present in Australia (continuously or intermittently) for 183 days in a financial year, unless the commissioner is satisfied that the person’s usual place of abode is outside of Australia.
Another angle to consider is the tie breaker test, which the Singapore
and Australia double tax agreement provides for. In the situation where you could be considered a resident in both Australia and Singapore, the tie breaker test could conclude that you are only a resident of one.
A note to those stuck in Australia during the lock down periods; as long as this was temporary in nature and you returned to Singapore as soon as you could, current dialogue from the ATO is that you won’t be treated as an Australian tax resident, however it’s important to seek professional guidance on your specific situation.
Tristan is an Australian Tax Agent and expatriate tax advisor based in Singapore, contact him below to discuss your situation in further detail. Select Investors Australia also presents regular webinars around these topics with the most recent Australian Corporate and Individual Residency webinar accessible at selectinvestorsevents.com
** The levels and bases of taxation, and relief from taxation, can change at any time. The value of any tax relief depends on individual circumstances. Please contact us to discuss your specific circumstances on email@example.com