Tax Residency

Australian Residency Tax Traps: Permanent Place of Abode

In order to be treated as a non-resident of Australia and thus not taxed as an Australian resident you must satisfy a number of tax residency tests.  One of those tests in establishing whether you are not a tax resident of Australia is whether you have a permanent place of abode in a foreign country.

What is a permanent place of abode?

Generally, if the Australian Taxation Office (ATO) asks you what your permanent place of abode is it is simply means what is your permanent home. This is hard to answer for example if you live in one place for a temporary time.  A test that courts apply when ascertaining your residency status boils down to a question of fact and degree.

For instance, do take note of where you mail your correspondence. That is, if you mail your Australian mail correspondence to your Australian residential address then this can be a significant factor for the ATO to consider.

What if you are an Australian expatriate, living a nomad lifestyle, and not settling your roots in one place?

Well, you might run into problems with the ATO.  If say you do not set up your roots in one place then you are an Australian tax resident.

What if you are living out of a suitcase

If you are only buying minimal things for your own residential comfort then you might have trouble establishing that your accommodation is your permanent place of abode.

Again, in the ATO’s eyes your main residency is still in Australia.

As a rule of thumb, if most of your possessions in your current accommodation can fit into a few suitcases then it is most likely that your your permanent place of abode is Australia.

To put it differently think about your current overseas accommodation as a tree and whether this tree forms part of a wider wood that is Australia. If you say no to do this your permanent place of abode is not in Australia. It follows that you are not a resident of Australia in that relevant income year.

If you say yes, your tree (accommodation) is within the proximity or purview of the wider wood that is Australia, it is indicative that your permanent place of abode is in Australia. It follows that you are a resident of Australia in that relevant income year.

What happens if I am an Australian tax resident?

If you are found to be an Australian tax resident, even though you are living and working overseas, you are required to pay income tax your earnings.

This spells trouble, especially if you are a high income salay.


If you are unsure about your residency status for Australian taxation purposes, contact us so we can assist in determining whether you are an Australian tax resident.




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