COVID-19 and Tax Residency: ATO Answers FAQs

COVID19 – Is your status as a tax non-resident affected if you return home to Australia


Tax Residency

COVID19 – Is your status as a tax non-resident affected if you return home to Australia

If you are a non-resident for tax purposes, an extended stay in Australia due to Covid-19 to be with family and friends may affect your tax residency status. If your stay meets the criteria for becoming a tax resident, you may be subject to Australian tax on your worldwide income from the date you become a resident. This could include income earned overseas during your stay in Australia. On the other hand, if you are an Australian resident who is stuck overseas due to Covid-19, your tax obligations in Australia may remain largely unchanged, although specific circumstances may vary. It’s advisable to consult the Australian Taxation Office (ATO) or a tax professional for personalized guidance. The ATO has provided answers to frequently asked questions to assist taxpayers in understanding their tax residency status and obligations.


Tax Residency Status: I am not considered a tax resident of Australia. However, due to COVID-19, my stay in Australia has extended beyond my initial plans. What are my obligations regarding Australian tax residency laws?

The ATO has stated that if you are not an Australian resident for tax purposes and are only in Australia temporarily for some weeks or months because of COVID-19, then you will not be considered an Australian resident for tax purposes provided that you usually live overseas permanently and you intend to return as soon as possible. Your tax obligations will generally remain unchanged as a non-resident.

If you had triggered residency concerns prior to COVID-19, and have subsequently been unable to leave Australia, your situation may be more complicated. Please contact us for further advice.


What happens if I earn employment income while I am here temporarily?

If you are receiving income whilst in Australia from a foreign employer while on paid leave, this will generally not be considered as Australian income and would not be assessable in Australia.

If you are working remotely in Australia due to COVID-19, and you were not intending to stay in Australia and have been unable to leave the country, the ATO will generally accept that working in Australia for less than 3 months will not result in you being assessed for Australian tax – regardless of whether your employer is Australian or foreign. This guidance will be further considered by the ATO as the COVID-19 situation evolves.


Double Tax Agreement: In the event that I receive a wage or salary in Australia while still maintaining tax residency status in my home country, how does the double tax agreement between Australia and my home country affect my tax situation?

The ATO had stated that Australia’s double tax agreements (‘DTA’) provide that, in certain circumstances, employment income derived by a person who is a resident of the other country (after applying the DTA tie-breaker rules) from performing employment duties in Australia for a short period will generally not be taxed in Australia.

Each DTA can vary from country to country, so it is important to carefully read the articles and times periods specified in the DTA.



As a tax resident of Australia who is currently working overseas due to COVID-19, how do my Australian tax residency obligations change during this period?

If you normally live and work in Australia and are only temporarily overseas due to COVID-19, your tax obligations will generally remain unchanged. If foreign laws require you to pay tax overseas, you will usually be entitled to a foreign income tax offset against your Australian tax payable.

How can Waterhouse Lawyers help you with tax residency?

Tax residency can become more complicated if you stay in Australia for a lengthy period of time, and do not make plans to leave if you are able to do so or vice versa. Waterhouse Lawyers is experienced in providing tax residency advice, having provided advice to many Australian expats living overseas. The lawyers and consultants at Waterhouse Lawyers understand the intricacies of various DTA’s Australia is a party to, and has also considered how international law and non-tax treaties apply to tax residency questions.

Visit the ATO website for more information on tax residency.

If you would like to inquire about our residency services, please contact us via our website, email or call 02 9252 8746.





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