4 Tests In Australia Essay

Australia uses four statutory ‘tests’ to determine the residence of an individual. An individual that satisfies the conditions in any one of the four tests is an Australian resident. An individual does not have to be a resident of another country in order to be a non-resident in Australia. Being a resident of another country (as determined by the tax law of that country) does not mean that person cannot be a resident of Australia as well. In fact, that is one of the important roles a Double Tax Agreement could play. A DTA will usually contain a “tie-breaker test” so you only end up with one country of residence for tax purposes. Australia has 44 DTA’s. However, if you go to a non-DTA country you may end up being taxed in both countries as a resident.
The four tests are commonly referred to as: 1. The
The 183 day test 4. The Commonwealth superannuation fund test

o The resides test
A person who resides in Australia is a resident of Australia for tax purposes. “Reside” is not defined in the tax Act so takes its “ordinary meaning” which in the tax context refers to the meaning given to the word in the dictionary. A prime factor here is physical presence. To reside in Australia you will have had a settled dwelling in Australia permanently or for a considerable period of time – at least six months in the ATO view for people entering Australia. Nationality, citizenship or domicile do not determine the matter.
The ATO will look at 4 main areas when considering you under the resides test.
• Physical presence and intention for being in Australia
• Family, business and employment ties a person has with Australia
• Assets that they have in Australia
• Living arrangements such as where the person’s children go to school, where the mail is sent to, memberships of groups such as a gym, a sports club or professional associations. The resides test looks at whether or not the person belongs to, or a part of, the Australian