The Australian Taxation Office recently published interactive “residency tools” to assist in determining whether a person arriving in or leaving from Australia, will be “resident” for tax purposes. The “tools” can be found at-

https://www.ato.gov.au/Tax-professionals/News-and-updates/Income-tax/Are-your-clients-residents-for-tax-purposes-/?tpissue-32-2014

Random “testing” of the “residency tools” indicates that the Tax Office is likely to regard non-citizens coming to Australia to take up contracts of 2 or more years to be resident for tax purposes. This can have serious outcomes for senior executives coming to Australia.

Being regarded as an Australian resident for tax purposes means that being exposed to Australian tax on your world-wide income AND having all of your non-Australian assets drawn into the Australian capital gains tax net. Double tax agreements might absorb some of the pain, but Australian marginal tax rates on executive income over AUD180,000 are an effective 49%. Accordingly, the Australian Tax Office is likely to reap a significant “arbitrage” benefit!

Those intending to come to Australia either as a “visiting” senior executive or to take advantage of Australian Residency Visa Schemes should take independent specialist advice concerning their likely taxation exposures before moving to Australia.