Yes. Moving to Australia, even as a permanent resident or citizen, does not automatically end tax residence in mainland China. Under the PRC Individual Income Tax Law, a person who is still “domiciled” in mainland China, a concept tied to household registration (hukou), family and economic ties, or who spends 183 days there in a calendar year, is a resident individual taxed on worldwide income. Australia applies its own, separate tests, so the same person can be a tax resident of both countries at once. The Australia–China tax treaty then decides which country is treated as the country of residence for treaty purposes, but it does not remove every obligation in the other country.
Two countries, two separate tests
Each country decides residence under its own law, and neither treats citizenship or visa status alone as decisive.
Mainland China: domicile or 183 days
Article 1 of the Individual Income Tax Law (as amended in 2018 and in force from 1 January 2019) treats two groups as resident individuals:
- people who have a domicile (住所) in mainland China; and
- people without a domicile who stay in mainland China for a total of 183 days or more in a tax year (the calendar year).
The 2019 Implementation Regulations define domicile as habitually residing in mainland China because of household registration, family or economic interests. Hukou is one of the listed factors, not the whole test. But a person who has moved to Australia while keeping a hukou, a family home, a spouse or parents, a business, or property and investments in mainland China may still be regarded by the Chinese tax authorities as domiciled there, even if they spend most of the year in Melbourne or Sydney.
A resident individual is taxable in mainland China on income from both inside and outside mainland China.
The six-year rule for people who are not domiciled
For people without a domicile, such as many Australian citizens who no longer hold a hukou, the 183-day test applies with a concession. Under a 2019 announcement of the Ministry of Finance and the State Taxation Administration (STA), a non-domiciled person who is resident under the 183-day test is generally taxed only on mainland-source income (plus foreign income paid by a mainland employer or person) unless, in each of the previous six consecutive years, they also spent 183 days or more in mainland China and never left for more than 30 days in a single trip. The six-year count started from 2019, and only full 24-hour days in mainland China count. A record-keeping filing (备案) with the tax authority is required to claim the exemption.
In practice, one departure of more than 30 days in any year resets the count.
Australia: four tests
Under the Income Tax Assessment Act 1936, an individual is an Australian resident if any one of these tests is met, as the ATO explains in Taxation Ruling TR 2023/1:
- Resides test: the person resides in Australia in the ordinary sense, judged on the nature, duration and quality of their presence and their connections here.
- Domicile test: the person’s domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside Australia.
- 183-day test: the person is in Australia for more than half the income year, unless their usual place of abode is outside Australia and they do not intend to take up residence here.
- Commonwealth superannuation fund test: relevant to certain Australian Government employees.
A permanent resident or citizen who has settled here will usually be resident under the resides or domicile test. Proposed reforms to these tests have not, at the time of writing, been enacted.
A separate category matters for many newer arrivals: a temporary resident (broadly, a temporary visa holder who is not an Australian resident for social security purposes and whose spouse is not either) is generally not taxed in Australia on most foreign-source income. That concession ends when the person becomes a permanent resident or citizen. We explain the Australian side in more detail in Becoming an Australian Tax Resident.
| Mainland China | Australia |
|---|
| Main tests | Domicile (hukou, family, economic interests); or 183 days in a calendar year | Resides; domicile; 183 days; Commonwealth super fund |
| Tax year | 1 January to 31 December | 1 July to 30 June |
| Residents taxed on | Worldwide income (with the six-year concession for some non-domiciled people) | Worldwide income (temporary residents generally exempt on most foreign income) |
| Foreign tax relief | Credit for foreign tax, capped at the Chinese tax on that income | Foreign income tax offset (FITO), capped by the offset limit |
How people end up resident in both countries
The following are composite illustrations of common patterns, not real clients.
Parents splitting their time
Consider a typical situation: retired parents hold an Australian parent visa and spend about half of each year with their children in Melbourne and half in their own apartment in Hangzhou, where they keep their hukou, their pension and their savings. Australia may treat them as residing here, while mainland China may still regard them as domiciled. If the visa is a temporary one, the temporary resident rules may shelter most of their Chinese income in Australia, but that does not change their position in mainland China.
A new permanent resident who keeps a hukou and a business
A business owner obtains permanent residency, buys a family home in Sydney and enrols the children in school, but keeps the hukou, remains a shareholder and director of the Shenzhen company and flies back regularly. Both countries may then claim to tax their worldwide income as a resident.
Returning to mainland China for long periods
An Australian citizen who no longer holds a hukou takes a role in Shanghai and spends most of each year there, while the family home remains in Melbourne. They are likely to be a PRC resident under the 183-day test. If the six-year count builds up, foreign income such as Australian rent and dividends may come within the Chinese net. Australia may continue to treat them as resident because their domicile and home remain here.
The tie-breaker in the Australia–China tax treaty
The Agreement between Australia and the People’s Republic of China for the Avoidance of Double Taxation (signed in 1988, as amended by its protocols and now modified by the OECD Multilateral Instrument) treats a person as resident of a country if they are fully liable to tax there because of residence under that country’s law. Where an individual is resident of both, Article 4 applies two steps in order:
| Step | Question | What is usually considered |
|---|
| 1. Permanent home | In which country is a permanent home available to the person? | A home owned or rented and kept available for continuous use, not short stays or hotels |
| 2. Economic and personal relations | If there is a permanent home in both countries, or in neither, with which country are their economic and personal relations closer? | Spouse and children, social and community life, work and business, where assets are managed, pensions |
This is shorter than the OECD Model and many of Australia’s newer treaties, which go on to consider habitual abode, then nationality, and finally a decision by the two tax authorities. The Australia–China treaty has no habitual abode or nationality step for individuals. If the two steps do not produce an answer, the remaining route is the mutual agreement procedure in Article 24: a person who considers they are being taxed contrary to the treaty may present their case to the tax authority of the country where they are resident, generally within three years of first being notified of the action, and the ATO and the STA endeavour to resolve it by agreement. The process is slow and its outcome is not assured.
What the tie-breaker settles, and what it does not
For treaty purposes, the tie-breaker settles which country is the person’s country of residence. The other country is then generally limited to taxing income sourced in that country to the extent the treaty allows, and the country of residence gives relief for that tax.
It does not:
- change the person’s status under either country’s domestic law for every purpose;
- remove lodgement or declaration obligations, or apply automatically: the position usually has to be claimed and supported with evidence;
- stop banks reporting accounts under the Common Reporting Standard on the basis of what the customer has declared;
- decide the position once and for all, because residence is tested year by year as facts change; or
- deal with hukou, social insurance or visa matters.
Certificates of tax residency
Where a person needs to show the Chinese authorities or a bank that they are an Australian tax resident, the ATO can issue a certificate of residency (individuals use form NAT 75441). The certificate confirms that, for a specific period, the person was an Australian resident for tax purposes, was not a temporary resident, and was liable to Australian tax on worldwide income. The ATO states that dual residents must first resolve their residence under the relevant treaty, for example through an early engagement advice request, before it will consider issuing a certificate. Temporary residents will generally not obtain one. The Chinese tax authorities can likewise issue a certificate of PRC tax residence on application.
Bank self-certifications under CRS in both countries
Australia and mainland China both take part in the Common Reporting Standard (CRS), and Hong Kong exchanges with mainland China. When opening an account, a customer gives the bank a self-certification of every jurisdiction where they are tax resident and the relevant tax identification number. A financial institution reports accounts held by residents of other jurisdictions to its own tax authority, which passes them on. The information typically includes name, address, jurisdiction of residence, tax identification number, account balance, and interest, dividends, gross sale proceeds and other income.
Problems arise when declarations do not match. A person who tells their Chinese bank they are resident only in Australia, while also filing in mainland China as a resident, or who tells an Australian bank they are Australian-only while the STA treats them as domiciled in mainland China, creates records that do not line up. Data-matching makes such inconsistencies visible, and an incorrect self-certification can itself be a breach. Self-certifications should reflect the actual position, including dual residence, and be updated when circumstances change. Whether a treaty tie-breaker result can be relied on in a particular form is a point to check with the bank and an adviser.
What residence means in each country
As a PRC tax resident
A PRC resident must report worldwide income, including Australian salary, rent, interest, dividends and gains on Australian shares or property. Interest, dividends, rental income and property transfer gains are generally taxed at a flat 20%, and employment income is combined with mainland income at progressive rates. Foreign income is declared between 1 March and 30 June of the following year, and a credit is allowed for foreign tax paid, up to the Chinese tax on that income.
The STA has been actively enforcing this. Since late 2024, local tax bureaus have sent text messages and made calls asking residents to review overseas income, drawing on CRS data. In late March 2025, bureaus in Hubei, Shandong, Shanghai and Zhejiang published cases of individuals required to pay tax on undeclared overseas income, and official media have reported that taxpayers have been asked to self-check overseas income for 2022 to 2024. Commentators describe a staged approach: a reminder, a request to correct, a warning interview, an investigation and, in serious cases, public disclosure. Unpaid tax attracts a late-payment surcharge of 0.05% per day under the Tax Collection Administration Law. Authorities have also publicised cases of voluntary correction.
As an Australian tax resident
An Australian resident (other than a temporary resident) must include worldwide income in their Australian return: rent from a Shanghai apartment, interest on Chinese deposits, dividends from a mainland company, and capital gains on overseas property or shares, all converted to Australian dollars.
The foreign income tax offset
Where Chinese tax has been paid on income that is also taxed in Australia, an Australian resident can generally claim a foreign income tax offset (FITO). Claims of up to $1,000 need no limit calculation; above that, the offset is capped at the Australian tax attributable to the foreign income. The offset is non-refundable, and any excess cannot be carried forward. Where both countries tax as residents, the treaty tie-breaker determines which country gives credit for the other’s tax.
Leaving mainland China: hukou and tax clearance
The Individual Income Tax Law requires a person who cancels their Chinese household registration because they are emigrating to complete a tax clearance with the tax authority where the hukou is registered before the cancellation. Whether a retained hukou is appropriate, and how it affects the domicile analysis, should be reviewed with a PRC adviser before or soon after settling in Australia. Planning before becoming an Australian tax resident is covered in Before Becoming an Australian Tax Resident.
Common mistakes and practical points
- Ignoring the hukou. A retained hukou, family home and business can support domicile in mainland China.
- Not counting days. Keep a travel log and passport records for both countries, by calendar year and by Australian income year, noting any trip over 30 days.
- Inconsistent declarations. Bank self-certifications, Chinese filings and Australian returns should tell the same story.
- Relying on the tie-breaker without evidence. Keep proof of where the permanent home is, and where family, work and assets are centred.
- Waiting for a text message. Voluntary review and correction of earlier years is generally viewed more favourably.
- Getting advice in only one country. A move between mainland China and Australia should be reviewed by a qualified PRC tax adviser and an Australian accountant together, before the move where possible.
Families with assets across several places may also need to coordinate Wills and structures; see One Family, Several Countries.
How we can assist
We advise on the Australian legal side of a move between mainland China and Australia, including Wills, estate planning, family structures and property, and we work alongside tax advisers in Australia, mainland China and Hong Kong. Whether a particular person is resident in either country, and how their income is taxed, depends on their facts; tax advice should be obtained from a qualified PRC tax adviser and an Australian accountant or tax adviser.
Related reading
Chua Tan Associates acts for families and their professional advisers on Australian legal matters with a cross-border dimension, working alongside tax advisers in Australia, mainland China and Hong Kong. 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.
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