Expats & COVID-19 Impacts on tax residency
The COVID-19 pandemic has resulted in many Australian expatriates living and working overseas returning to Australia.
In addition, Australian citizens and permanent residents have been restricted or banned from leaving Australia.
Will those expatriates who have returned temporarily due to the COVID-19 crisis be able to resume working overseas?
Some of these will have ceased to be residents for Australian taxation purposes either when they first left Australia or at some later stage in their life overseas. However, will their (temporary?) return to Australia change that status and result in them being treated as residents for Australian tax purposes? Australian Taxation Office guidance continues to evolve.
Although COVID-19 has create unusual circumstances beyond any taxpayer’s control, the taxpayer must still determine their tax residency status, according to the established law, which has not changed. It remains an analysis of many factors.
Intentions and evidence regarding foreign employer leave arrangements and expectation of returning to work overseas, add an extra layer on the already complex question. Any communications with overseas employers and landlords, etc, may be crucial when a decision on tax residency become necessary. But, staying beyond the “lockdown” period may indicate a change of intention.
What can be more complex is taking temporary work in Australia, whilst a foreign tax resident. Is that evidence of a change in intention?
With so many unknowns, if you intend to return overseas, gathering/generating evidence now may tip the balance in your favour.