Individual & Company Tax Residency Issues
Individuals - Inbound & Outbound Tax Residency Issues
The primary test of tax residency concerns where you live. If you reside in Australia, you are considered an Australian resident for tax purposes and you do not apply any of the other residency tests. If this test does not apply, there are 3 other tests:
The decision in Harding v Commissioner of Taxation  FCAFC 29 (decided 22 February 2019) considered the meaning of "permanent place of abode". Where a person has their permanent place of abode may be referrable to a town, village, suburb or a country. A person who has their permanent place of abode outside of Australia is not subject to Federal income tax laws in Australia.
Its crucial to consider the facts of a particular person’s circumstances in determining their residency status and from what date their residency commenced or ceased. As the cases have shown, different outcomes arise under different circumstances.
Even if a person is a resident of Australia for tax purposes, some or all of their income derived overseas may be exempt from income tax in Australia, depending on the circumstances.
The decision in Harding's case+ READ MORE
In relation to the requirement that the Commissioner be satisfied that a person has a permenent place of abode outside of Australia, the Court approved the following statement:
In order that the test may not be applied to persons who have definitely abandoned their Australian residence, a condition is provided that a person whose legal domicile is in Australia is not to be treated as a resident if the Commissioner is satisfied that his permanent place of abode is outside Australia.
It is a legal requirement for the Commissioner to be "satisfied" and whether the Commissioner was in error is open to challenge. Once error on the part of the Commissioner in being satisfied (or not satisfied) of the kind identified by Dixon J in Avon Downs Pty Ltd v Commissioner of Taxation has been established, it is right for the court to reach its final conclusion as to whether or not the Commissioner ought to be satisfied by reference to all the material before the Court. The court’s so doing prevents arbitrary exaction by the Commissioner, who is an officer of the Executive.
Depending upon the circumstances, a person may be a dual tax resident because there may be inconsistent tax residency rules between Australia and other countries.
Specific Inbound Tax Residency issues
If you become a resident of Australia for tax purposes, there are a number of specific tax problems which may arise including:
Specific Outbound Tax Residency issues
If you cease being an Australian resident, for CGT purposes, you are deemed to have disposed of assets that are not taxable Australian property for their market value at the time. This may result in serious tax consequences for the taxpayer depending upon the circumstances.
Resuming Tax Residency
Australians returning to live permanently in Australia should be aware that there are special capital gains tax issues which arise for foreign tax residents who commence to live in Australia.
Common Reporting Standards for foreign tax residents
From 1 July 2017, the Common Reporting Standard (CRS) is the single global standard for the collection, reporting and exchange of financial account information on foreign tax residents. Under it, banks and other financial institutions will collect and report to the ATO the financial account information on non-residents. The ATO will exchange this information with the participating foreign tax authorities of those non-residents. In parallel, the ATO receives financial account information on Australian residents from other countries' tax authorities.
Companies - Central Management & Control Issues
The test for when "central management & control" was considered by the High Court in 2016. The issue of central management and control can affect Australian companies with overseas operations and foreign companies with Australian operations.
The existence of a double tax agreement between Australia and the company's place of domicile may be material to whether the corporate group will be required to pay double taxation.