For families moving between Asia and Australia, tax residency is the threshold question. It decides whether Australia taxes a person on worldwide income or only on Australian-source income, and it affects trusts, companies, estates and property. Residency is not the same as visa status or citizenship, and it can change without anyone intending it to.
How Australia decides residency
Australia’s individual residency rules are a combination of tests developed over many decades. Reform was announced in 2021, but as at 2026 it has not been legislated, so the existing tests still apply:
- The “resides” test. Whether a person, in the ordinary sense, resides in Australia, having regard to physical presence, family and business ties, accommodation, assets and intention.
- The domicile test. A person whose domicile is Australia is a resident unless their permanent place of abode is outside Australia.
- The 183-day test. Presence in Australia for more than half the income year can make a person resident unless their usual place of abode is elsewhere and they do not intend to take up residence here.
- The Commonwealth superannuation test. Relevant to certain government employees overseas.
Outcomes turn on facts. A parent who spends long periods in Melbourne with children at school here may be resident even while running a business in Asia. A person who has moved overseas may remain resident if their home and family stay in Australia.
Temporary residents
People in Australia on temporary visas, who are not Australian citizens or permanent residents and whose spouse is not an Australian resident for social security purposes, are generally treated as temporary residents. Most of their foreign-source income and gains are not taxed in Australia, although Australian-source income and employment income are. The position changes when a person obtains permanent residency, which is often the point at which planning is most needed.
What happens on arrival and departure
- Arrival. Generally, when an individual becomes a resident, assets that are not taxable Australian property are treated as acquired at their market value at that time for capital gains purposes. Valuations at the date of arrival are therefore worth obtaining.
- Departure. When an individual ceases to be a resident, there is generally a deemed disposal of assets other than taxable Australian property, unless the person chooses to defer the gain. Australian real property remains within the Australian tax net regardless of residency.
- Trusts and companies. A change in a family member’s residency can change how offshore trusts and companies are taxed. See foreign trusts and companies for Australian residents.
Dual residency and tax treaties
A person can be resident in two countries at once under their domestic laws. Australia’s tax treaties, including with China, Singapore, Malaysia, Indonesia, Japan and others, contain tie-breaker rules based on permanent home, personal and economic ties and habitual abode. Australia does not have a comprehensive tax treaty with Hong Kong, so no treaty tie-breaker or treaty rate reductions are available in that relationship, and domestic rules on each side apply.
Treaties do not override everything. China’s rules, for example, may treat a person as resident where their household registration, family and principal economic interests remain in China. See China’s new offshore trust tax rules.
Practical steps
- Review residency before a move, a change of visa, or a long stay in either direction.
- Record values of overseas assets at the date residency begins or ends.
- Review trusts, companies, wills and powers of attorney when a family member’s residency changes. See trusts and wills before becoming an Australian tax resident.
- Coordinate advice in each country so the family’s position is consistent.
How we assist
We advise families and their advisers on the legal structures affected by changes in residency, including trusts, companies, wills and cross-border estates, and coordinate with accountants and tax advisers in Australia and overseas. This article is general information only; tax outcomes depend on individual circumstances and should be confirmed with a qualified tax adviser. Justin Chua is a Nationally Accredited Mediator and an Affiliate member of STEP, the worldwide professional body for trust and estate practitioners.
Frequently asked questions
Does a permanent residency visa make someone an Australian tax resident?
Not by itself. Tax residency is decided under separate tests, although obtaining permanent residency often coincides with becoming a resident and ends temporary resident treatment.
How are temporary residents taxed in Australia?
Generally, temporary residents are taxed on Australian-source income and employment income, but most foreign-source income and gains are not taxed in Australia.
Does Australia have a tax treaty with Hong Kong?
Australia does not have a comprehensive tax treaty with Hong Kong. Australia does have comprehensive treaties with China, Singapore, Malaysia, Indonesia and many other countries.
What happens to overseas assets when someone becomes an Australian resident?
Generally, for capital gains purposes, assets other than taxable Australian property are treated as acquired at their market value when the person becomes a resident. Valuation records at that date are important.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice. Victorian law unless stated otherwise.
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