Can I become a non-resident for tax purposes?


At the end of July this year I commenced working as a consultant on a project in the Philippines. This is a fly-in, fly-out role (I worked the previous 18 months in a fly-in fly-out role in PNG). I spend 20 full days working in Manila, with a travel day either side , then get 17 full days off back in Victoria. At this stage I only have a contract until the end of the year, but I am likely to be offered one to extend into mid or the end of 2012. In reality I will be able to keep working on this project for several years. I am not interested in moving to Manila to live. I will still need to come back to Australia for my breaks as my girlfriend lives with me in Melbourne. I own the flat that we live in and I also own a very basic coastal holiday shack and also own a car.

My question is would it be possible under this arrangement to become considered as a non-resident for tax purposes. I understand that in any case to achieve this I would need to sell/transfer registration of my car and rent out my house. What else would I need to do? Would I still be able to come back to Australia regularly without losing non-tax residency status, including doing some consulting in Australia?




Hi John,

The short answer is no, but I guess you would like to know why.

Here is a link to an ATO test you can take:

IT 2650 is the ATO ruling on this topic. It looks at where your home is, which would be presumed to be Australia unless you had a permanent place of abode elsewhere. The fact that you return regularly and your girlfriend is here are probably your biggest obstacles

Here are a couple of examples from the ruling
31. An Australian resident employee of a mining company was transferred overseas for a temporary work assignment for a period of 2 years and intended to return to Australia at the end of that period. The purpose of the assignment was for the employee to gain wider work experience. The employee was initially accompanied by his wife and children but the children returned to Australia to continue their schooling. The employee spent his annual holiday in Australia. During his absence from Australia he rented out his home and maintained bank accounts in Australia. He made no investments in the overseas country and remitted all money in excess of living requirements to Australia for investment. In those circumstances the taxpayer was not considered to be a resident of Australia under the ordinary meaning of the word "resident" but was considered to be a resident under the extended definition of that term.
Result: resident.
32. A person who had just completed tertiary studies decided to leave Australia for an unspecified period of time to work in one overseas country to gain work experience. Before leaving she closed all bank accounts except for a 5-year interest bearing deposit. She had no established home in Australia and no spouse or children in Australia. While she was forced to return to Australia within 18 months due to an illness, she was considered to be a non-resident as it was her original intention to remain outside Australia for an unspecified period of time and she was considered to have a permanent place of abode in the overseas country.
Result: non-resident.
The opposite conclusion would have been reached if she had intended to (and did) spend one year each in 2 countries and then had travelled for a further period of one year, making do in temporary or transitory accommodation in each country as she went. In that case she would not have a permanent place of abode in any of the overseas countries and would continue to be a resident of Australia.

There are more examples in the ruling if you are interested here is the link.

Have a question about tax you need answered?

Ask your own tax question here