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Are you non-resident for tax purposes?

Written by David Baruffi

02/10/2008

Australian expatriates can incur Australian tax on their income even if they are living and working offshore.

Australians are taxed on their worldwide income unless they are a non-resident for tax purposes. Non-residents are only taxed here on any income derived from Australian sources.

Therefore your residency status for tax purposes is crucial. The question arises is "what makes you a non-resident for tax purposes?".

Many people think if you are working offshore for more than 183 days per year you are a non resident. This may not be correct, as there are several provisions in the law determining residency. In a recent court case an Australian who worked offshore for 257 days in a year was still deemed to be an Australian tax resident and had to pay tax (and penalties) on the income earned while working in Kuwait.

On the 29th of June 2009 new laws were effected to tax foreign employment income of all Australian residents, regardless of the time spent off shore.

International tax is a highly complex area which if not dealt with correctly could have costly consequences. We recommend you seek tax advice on your personal circumstances in order to avoid any nasty surprises.

*David Baruffi is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.

Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.