The Government has recently released the Board of Taxation’s proposed new individual tax residency rules. The report was given to the Treasurer back in March 2019, but the Board’s preferred proposal has just been released. The current rules were seen to be outdated and complex given the global nature of workplaces nowadays. Additionally, the current rules result in a lot of uncertainty and lots of disputes.
The proposed new rules are a two-step approach. The first step is the 183 Day Test. This primary test simply finds out whether an individual spends 183 days or more in Australia. If they do, the individual is a tax resident.
The second approach includes rules that are more targeted and objective, depending on each individual’s circumstances. These secondary rules set out clear criteria as to when an individual who is in Australia for less than 183 days in an income year commences or ceases residency. In accordance with the adhesion principle, the longer an individual is a tax resident, the more difficult it is to cease residency.
These secondary rules adopt a Day-Count Test together with a new Factor Test – four objective factors which the Board, through consultation, has concluded best demonstrate an individual’s connection to Australia.
Learn more about the proposed new rules for Individual Tax Residency from Effective PD’s webinar. Subscribe to Effective PD at www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way.
