Like most countries, Australia taxes residents on their worldwide income but taxes non-residents only on income from Australian sources. In some cases non-residents pay higher rates of tax on their Australian income than do residents.

Who is a resident?

A resident is defined in section 6(1) of the 1936 Act, not very usefully, as someone who resides in Australia. Whether or not a person is a resident is primarily a question of fact. Actual presence in the country for more than 183 days in a tax year will make a person a resident unless they can prove they do not intend to live here and have a usual home somewhere else.

When does a person become a resident?

See Taxation Ruling TR98/17 for a discussion of the factors that determine when a person entering Australia becomes a resident.

A person with Australian domicile

It is possible to be a resident while not actually living here by retaining Australian domicile (not citizenship, which is irrelevant for tax purposes). This is a legal concept used to determine which legal system should apply to someone for various purposes. For adults it is normally the place they regard as their permanent home, even if they are absent from it frequently.

Long continuous absence

In practice, someone who is continuously absent from Australia for two years or more will be accepted as a non-resident by the commissioner (see IT 2650).

Overseas students

Overseas students are generally treated as residents only if they enrol for a course of study longer than six months.

Permanent entry status

A migrant with permanent entry status is treated as a resident on arrival (IT 2681).