Written by

Tax Director, ODIN Mortgage & Tax

10+ years advising expats and overseas investors on Australian tax

Last reviewed

Updated on: August 10, 2026 View profile →

Australian Tax Residency Rules for Expats: Current Law & Proposed Changes (2026)

Just as you thought you had wrapped your head around the expat’s individual tax residency rules, the government announced new tax residency rules in Australia. So, what’s different? When do the proposed rules come into effect? Are you now a resident for tax purposes or not? We’ll answer all your questions and more.

Many Australian expats and international investors navigating the new tax residency rules are concerned about how changes to residency tests affect their tax obligations, reporting requirements, and investment planning.

This article explains the proposed changes — including the emphasis on the 183‑day rule and objective tests that consider time in Australia and ties such as employment, family, and property. Note: as at July 2026, these rules have not yet passed into law.

Understanding these rules helps you plan for worldwide income tax liabilities and avoid unexpected tax outcomes while living and investing abroad.

What Is Wrong With Our Current Tax Residency Rules?

Nothing is perfect, and that includes Australia’s taxation rules for expats. Knowing whether you’re a tax resident or not is confusing at the best of times. Now that government officials are introducing new rules, it’s even harder to determine your residency for tax purposes. Why do the rules have to change?

Well, for these very reasons, too many Australian expats struggle to work out whether they’re tax residents or not. The current regulations are principle-based. ATO has to judge residency status on a case by case basis. The proposed rules try to minimise the confusion.

For example, the current residency test dictates that if someone is physically present in Australia for a certain length, they are a tax resident. However, if the person can prove their primary residence is elsewhere, they might be a non-resident for tax purposes. The regulations aren’t beneficial for expats trying to assess their residency status.

Current ATO Residency Tests

So, what are the current rules? At the moment, you need to take a primary and secondary test. If you satisfy the requirements of the first test, you won’t need to undertake any more – you will be a tax resident.

Primary Test

The first step to determine your residency for tax purposes is the ‘resides’ test. The ATO website states that the definition of ‘resides’ is ‘to dwell permanently, or for a considerable time, to have one’s settled or usual abode, to live, in or at a particular place.’ However, this definition is not written in tax law – adding further ambiguity.

Accordingly, to determine if you are residing in Australia, ATO looks at your day to day life. If your activities are relatively similar to those pre-moving to Australia, they might consider that you have made Australia your permanent home. ATO will look at:

Why you’re in Australia
Whether you have a family, business, or employment ties in Australia
Whether you have any assets in or out of Australia – e.g. property

Your social and living arrangements – e.g. do you use Australian or foreign bank accounts?

Secondary Tests

If you don’t satisfy the resides test, you will have to take the secondary tests to determine whether you’re an Australian resident for tax purposes:

Domicile test: if your permanent address is in Australia, you’re an Australian resident even if you spend less than 183 days in the country.
183-day test: if you spend more than half the tax year in Australia, working and living in the same or similar place, you’re an Australian tax resident.
The Commonwealth superannuation fund test: if you’re a contributing member of the Public Sector Superannuation Scheme or the Commonwealth Superannuation Scheme, you’re a tax resident of Australia.

Australian Tax Treaties: Double Tax Agreements (DTA)

If you’re a tax resident of more than one country, you might fear paying double taxes. Fortunately, Australia has double tax agreements with more than forty other countries. If your second country of residence is one, you will get a tax offset against your taxable income.

Essentially, the Double Tax Agreement uses a tie-breaker test to determine which country you pay tax. Unfortunately, if you reside in a country that does not have a relevant Double Tax Agreement, such as Hong Kong, you will have to pay two lots of taxes.

The tie-breaker test looks at the following factors:

If you have a permanent home in one country
If you have a habitual abode in one country
If you have stronger personal and economic relations in one country over the other

For example, an expat with property and a job in Singapore might be their tax resident rather than in Australia.

Proposed Residency Tests

The new tests aim to clarify the ATOs individual tax residency changes. The basic structure is the same: expats will have to take a primary test and secondary assessments if they fail the first.

Introducing the Primary 183 Days Tax Rule Australia

The new primary test is the 183-day test, based on your physical presence. It’s essentially the same as the previous test, except it’s moved up in importance. If you spent 183 days or more in Australia during the financial year, you are an Australian resident for tax purposes.

As a result, you will need to pay tax on your worldwide income regardless of whether you reside permanently in Australia.

The new primary 183-day test removes ambiguity. You no longer need to worry about your Australian economic interests or whether you have an Australian family. Most Australian expats will fail the 183-day test and move to the subsequent stage.

Secondary Tests: Commencing Residency

If you pass any of the secondary tests in the previous rules, you are automatically considered tax residents. However, the proposed new rules follow a step-by-step process. The new tests are:

45-day test
Factor test

ATO 45 Day Rule

The ATO 45 day rule is straightforward.

Did you spend fewer than 45 days in Australia? If yes, then you’re not a tax resident.

Did you spend more than 45 days in Australia but less than 183 days? If yes, then you have to move on to the factor test.

That’s the basics of the ATO 45 day residency rule Australia.

The Factor Test

If you spend more than 45 days in Australia and answer yes to two or more of the following, you are an Australian tax resident.

Right to reside permanently in Australia: Any citizens and permanent residents of Australia, including most Australian expats.
Australian accommodation: Do you have a property in Australia available to live in, such as an empty home or holiday home?
Australian family: Do you have a spouse or children below 18 that live in Australia for most of the income year?
Australian economic interests: Do you have employment in Australia, an active business, or interest in an Australian asset, such as taxable Australian property?

Most expats will meet at least two (if not more) of the new factor tests. Therefore, Aussie expats have to spend less than 45 days in Australia under the new rules to avoid commencing residency.

Ceasing Residency

What about expatriates leaving Australia? Unfortunately, the new legislation also makes it more challenging to cease Australian tax residency.

Employment Test

If you meet all of the below employment rules, you will be a non-resident of Australia from the day you leave:

A resident of Australia for the three prior income years
Employed overseas with an employment period of more than two years
Available accommodation for the entire employment period
Spend less than 45 days in Australia each tax year during the employment period

If you don’t meet all of the employment rules, you will need to assess whether you’re a long-term or short-term resident.

Short Term Tax Resident

Have you been an Australian tax resident for less than three years? If the answer is yes, then you’re a short-term resident. If you spend less than 45 days in Australia and don’t pass the above factor tests, then you’re a non-resident from the day you leave Australia.

However, if you satisfy more than two of the factor tests and spend more than 45 days in the income year in Australia, you’re a tax resident.

Long Term Tax Resident

However, if you have been an Australian tax resident for more than three years (applicable to most expats), you need to wait to cease residency. You need to spend less than 45 days in one income year for three years before you can change your status.

However, you would have had to weave between many different residency tests to get to this stage. Most expats will have determined their tax residency before getting to this step.

Struggling With Your Australian Property Buying Process?

An Example of New Rules, Old Assets: Gill's Australian Rental Property and the Residency Tango

Gill is an Aussie expat living in Singapore. She is retired. Gill moved to her newly purchased Singapore home two years ago and kept an Australian rental property in New South Wales. Gill spends a few weeks in Australia each summer checking on the property, which totals less than 45 days.

Regardless of her residency status, she must pay tax on her rental income. Whether she’s a foreign resident or not will impact the income tax rates.

Under the old rules, Gill would have first taken the resides test. With a permanent abode in Singapore and little intention of staying in Australia, Gill isn’t a tax resident. While she has Australian assets, her behaviour suggests that she does not intend to live in Australia.

Let’s see what happens if we use the same facts and apply the new rules. In the first year Gill leaves Australia, she spends less than 183 days in the country. However, this isn’t necessarily enough to cease her tax residency. As Gill is retired, she doesn’t satisfy the employment test. Therefore, she needs to determine if she is a long or short term resident.

As she was an Australian tax resident for more than three years before departing Australia, she cannot cease her tax residency until she has spent fewer than 45 days in the country for three consecutive years. As a result, Gill is a tax resident for her first two years living away from Australia.

When Do the Proposed Rules Come Into Effect?

As at July 2026, the new individual tax residency framework remains a proposal only — it has not been legislated. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, addressed CGT, negative gearing, and work-related expense deductions — but did not include the residency reform.

The existing four-test framework — resides test, domicile test, 183-day test, and Commonwealth superannuation fund test — continues to apply for the 2024–25 and 2025–26 income years. Do not make residency decisions based on the proposed rules until they are formally enacted.

Conclusion: New Tax Residency Rules Australia

To clarify — under the current law (as at August 2026):

The four-test framework continues to apply: resides test, domicile test, 183-day test, and Commonwealth superannuation fund test. You are an Australian tax resident if you satisfy any one of these tests.

The proposed rules — including the 45-day threshold, factor test, and employment-based ceasing test described above — have not been legislated. Do not make residency decisions based on the proposed framework.

In practice, most Australian expats who have moved their permanent home overseas and spend fewer than 183 days per year in Australia will be non-residents under the current four-test framework. The exact determination depends on your individual circumstances — particularly the domicile and resides tests, which are assessed case by case.

If you are an Aussie expat living overseas, speak to an experienced tax advisor before making any residency decisions. The stakes — worldwide income tax, CGT on Australian assets, and Medicare levy — are too high to get wrong.

FAQs about the Changes to the Australian Tax Residency Rules Affecting Expats

How many days can you stay in Australia without paying tax?

Under the current law, there is no single day-count threshold. Your residency depends on the four-test framework: resides, domicile, 183-day, and Commonwealth superannuation tests. As a general guide, if you spend fewer than 183 days in Australia and have established a permanent home overseas, you are likely a non-resident — but the ATO assesses each case individually.

The proposed (but not yet legislated) rules would introduce a 45-day threshold as a bright-line test. Until that reform is formally enacted, the 45-day rule does not apply.

What determines tax residency in Australia?

ATO judges your tax residency on how long you’re physically present in Australia, your familial and economic ties, and your intentions. Even if you proclaim that you don’t intend to live in Australia, ATO will probably decide you’re a tax resident if you still use an Australian bank account and have an Australian business.

How do changes to the Australian tax residency rules affect Aussie expats living in Singapore?

As at August 2026, the proposed changes to Australia’s tax residency rules — including the new primary 183-day test and 45-day secondary threshold — have not been legislated. The existing four-test framework continues to apply. Under current law, most Australian expats in Singapore who have established a permanent home overseas and spend fewer than 183 days in Australia per year are likely non-residents — though the ATO assesses each case individually based on your ties to Australia. Speak to an experienced tax advisor about your specific circumstances.

Will Aussie expats living in Hong Kong be affected by the changes to the Australian tax residency rules?

As at August 2026, the proposed changes to Australia’s tax residency rules have not been legislated. The existing four-test framework continues to apply. Most Australian expats in Hong Kong who have established a permanent home overseas and spend fewer than 183 days per year in Australia are likely non-residents under current law — but the ATO assesses each case individually. Note that Australia has no Double Tax Agreement with Hong Kong, which can create dual tax exposure on certain income. Speak to a qualified tax advisor about your specific circumstances.

What about Australian expats living in the UAE? Will the changes to the Australian tax residency rules affect them?

As at August 2026, the proposed changes to Australia’s tax residency rules have not been legislated. The existing four-test framework continues to apply. Most Australian expats in the UAE who have established a permanent home overseas and spend fewer than 183 days per year in Australia are likely non-residents under current law. As a non-resident, you’re only taxed in Australia on Australian-sourced income — not your UAE earnings. Speak to a qualified tax advisor for advice on your specific situation.

Am I considered an Australian resident for tax purposes if I spend 45 days here?

No, spending only 45 days in Australia generally wouldn’t make you a resident for tax purposes. Australia currently uses a “domicile rule” and a “183-day rule” to determine tax residency.

If you’re concerned about your residency status, it’s best to consult with a qualified tax advisor who can assess your individual circumstances and provide you with accurate advice.

How are "days" counted under the 183 days tax rule in Australia?

All the days you’re physically present in Australia during the income year count, including arrival and departure dates. It doesn’t need to be a continuous presence.

What are the new rules for tax residency in Australia?

As at August 2026, Australia’s tax residency rules have not changed. The four-test framework — resides, domicile, 183-day, and Commonwealth superannuation fund tests — continues to apply for the 2024–25 and 2025–26 income years. The proposed new framework (announced in the 2021-22 Budget) would introduce a primary 183-day test and a secondary 45-day threshold with a factor test — but this has not been legislated. See the “When Do the Proposed Rules Come Into Effect?” section above for the current status.

What are the tax consequences of becoming a non-resident in Australia?

Becoming a non-resident in Australia means you are only taxed on Australian-sourced income, such as rental income or capital gains from property. Non-residents lose the tax-free threshold and pay higher tax rates.

Additionally, capital gains tax (CGT) may apply if you sell certain assets like property after leaving the country.

Am I still an Australian resident if I live abroad?

You may still be an Australian tax resident if you live abroad, depending on factors like your intentions to return, ties to Australia, and time spent in the country.

If you maintain significant connections, such as property or family, you could remain a resident for tax purposes, meaning you’ll be taxed on worldwide income.

How long can I stay in Australia without becoming a tax resident?

You can stay in Australia for up to 183 days in a financial year without becoming a tax resident, provided you don’t establish significant ties, such as employment or long-term accommodation. Staying beyond this or building substantial connections may trigger tax residency.

What is the 45 day residency rule in Australia?

The 45-day residency rule in Australia is a proposed rule where individuals spending 45 days or more in Australia and having significant ties (e.g., property, family) may be classified as tax residents, making them liable for tax on worldwide income.

Australian Tax Residency Rules for Expats: Current Law & Proposed Changes (2026)

What Is Wrong With Our Current Tax Residency Rules?