[Tax] When you no longer an Australian tax resident

Usually, if an individual stops being a tax resident of Australia, their income tax position will change significantly. 

1

    You are taxed only on Australian-sourced income

Once you become a tax resident, the ATO taxes you on all income from everywhere.

Non‑residents are taxed only on Australian‑sourced income, such as:

• Australian rental income

• Australian employment income

• Australian business income

• Certain Australian capital gains

Foreign income (salary, interest, dividends, overseas investments) is no longer taxable in Australia.

 2

      Final 'resident' tax return

In the year you leave, you must lodge a return that:

- Declares worldwide income up to the date you ceased residency

- Declares only Australian‑sourced income after that date

- Notifies the ATO of your residency change

This is required even if you leave mid‑year.

 3

     Deemed disposal of your non-TAP.

This is one of the most important — and often unexpected — consequences.

Under s.104-160 of ITAA97, when you cease Australian tax residency, the ATO may treat you as if you sold all your non‑taxable Australian property (non-TAP) assets the day before you left, triggering CGT on unrealised gains.

This applies to:

- Shares

- Managed funds

- Crypto

- Foreign property

- Interests in private companies or trusts

Under s.104-165 of ITAA97, You can choose to:

- Pay CGT immediately, or

- Defer it until you actually sell the asset (but the asset will then be treated as taxable Australian property, and the ATO keeps taxing rights).

This rule is confirmed in tax guidance on ceasing residency.

 4

      TAP

Even as a foreign resident, you must pay tax on:

• - Rental income from Australian property

• - Capital gains when you sell Australian real estate

Please note that foreign residents cannot claim the main residence exemption unless very strict conditions are met.

This rule is confirmed in tax guidance on ceasing residency.

 5

      When you stop being a non-tax resident of Australia

To stop being treated as a tax resident of Australia, the ATO expects evidence that your centre of life has moved overseas, and you won't satisfy any of the common law test or statutory test for being a tax resident of Australia.

This includes, but is not limited to:

- Establishing a permanent home overseas

- Moving family overseas

- Selling or renting out your Australian home

- Closing or reducing Australian bank accounts

- Cancelling memberships and private health insurance

- Reducing visits to Australia

- Updating your address with institutions

Disclaimer: This article is intended to provide general information only and does not constitute professional advice for specific circumstances.  It should not be relied upon as a substitute for tailored advice.

Source: ATO, ITAA36, ITAA37