Tax Resident / Non-Residents

One of the basics of taxation involves whether you are a resident or non-resident of Australia for tax purposes. Different rules and taxation rates apply to both. Non-residents of Australia are generally taxed at a higher rate whereas more favourable taxation terms are applied for Australian residents.

“Resident” for tax purposes definition differs from the definition as defined by the Migration Act. A basic rule of thumb for an Australian resident for tax purposes can be defined as a person that has stayed for more than 183 days within a financial year (365 days) in Australia.

Australian residents for tax purposes are taxed on their worldwide income whereas a non-resident for tax purposes are taxed only on their Australian source of income.

Non-resident for tax purposes have no access to benefits such as the tax free threshold, and Capital Gain Tax concessions. A change of Tax law in May 2012 resulted in non-resident for tax purposes not being entitled to the 50% discount on capital income (gains) for assets held over 12 months.

The only benefit a non-resident has is a tax rate of 10% for interest income in Australia, and an exemption on profits as a result of sale of shares within the ASX. It is also noted that taxation non-residents do not have access to franking credits from dividends as well.

Share Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someonePrint this page