New ATO ruling affecting Australian expatriates

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What is the ATO’s new ruling on an individual’s tax residency status?


A newly published draft ruling should be favourably received by Australian expatriates as compared to any proposed statutory changes to Australia’s residency rules.

On 6 October 2022, the Australian Taxation Office (ATO) released Draft Taxation Ruling TR 2022/D2 outlining the residency tests for individuals for tax purposes, including the Commissioner’s updated views on when the ATO considers a person will be a resident of Australia.

The release of TR 2022/D2 is a curious show of commitment by the ATO to the existing residency laws that were first enacted in 1930. These near-centenarian laws have long been slated as in need for modernisation and it has been widely anticipated that this year’s Federal Budget will be in keeping with that direction. Perhaps this show of commitment by the ATO serves as a harbinger that the existing laws will remain in place for some time to come.

Representing a bold endeavour by the ATO on another front, once finalised, TR 2022/D2 will operate as the successor to the ATO’s existing published views on residency, which have been undisturbed and resistant to change for the last 30 years.

In TR 2022/D2, the ATO has coalesced the most recent tax residency arguments into a somewhat more precise and distilled guide in determining an individual’s residency status, albeit ladened with provisos. The ATO has also supplemented its views in this ruling with contemporaneous examples that illustrate how the Commissioner considers Australia’s residency laws interact with modern-day lifestyles, where an individual’s living, working and family arrangements can span across several countries. Which is of particular importance to many, if not all, Australian expatriates.

Overall, TR 2022/D2 should, once finalised, provide a welcomed improvement to the clarity of the application of Australia’s residency laws, as well as a welcomed authority in opposition to the much criticised proposed residency law changes.

From our practical experience in advising overseas Australians in respect of their Australian tax affairs, TR 2022/D2 should be received favourably by Australian expatriates due to its common-sense, principles-based approach in determining residency as compared to any adoption of a hard-line and detrimental 45-day rule, as may likely be the case under the proposed rule changes.

Should you have any enquires regarding your Australian residency status or require assistance regarding Australian expatriate taxation, please do not hesitate to contact our office.

About the Author

Dean Crossingham

Dean provides tax advice and tax lodgement services to Australian expatriates.

This includes expert guidance in navigating the complex Australian tax consequences of exiting and recommencing Australian residency, international relocation tax planning, personal asset structuring as well as attendance to Australian tax return lodgements for Australian expatriates.

Dean Crossingham