Testing the 183-day rule for residency

April 2015

Testing the 183 day residency tet

The AAT has been hearing a number of cases in recent months that deal with the residency status of taxpayers who have arrived in Australian on a working holiday visa (Subclass 417) and who have been here for more than 183 days in a tax year.

In each of the cases, the taxpayer:

Was a foreign national
Had arrived on a temporary residence visa
Stayed more than 183 days but less than a year

In these cases the taxpayers were actually arguing that they were residents of Australia, because as residents they would have been able to access the tax-free threshold that is not available to non-resident individuals.

Criteria for the 183-day test

The crux of the issue is the application of the 183-day test, which applies if the taxpayer has been in Australia for more than half the income year, unless the Commissioner is satisfied that their usual place of abode is outside Australia and they do not intend to take up residency here.

Failing the 183-day test

Because each of the individuals had spent several months living in shared accommodation, the usual place of abode needed to be identified.

As always with residency issues, intent and documentation matter. The intention of these taxpayers was to travel and seek temporary work as part of a working holiday visa.

These cases showed that the taxpayers had spent more time travelling and staying in hostel-style accommodation or shared accommodation, which the Commissioner considered. His determination was that their usual place of abode was outside Australia at their parent's homes overseas.

Last updated April 2015.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.