Australian Tax Residency When You Move Abroad (2026)
Key takeaways
- Residency is a test of facts, decided under four ATO tests; you remain a resident while you satisfy any one of them.
- The resides test is primary; the domicile, 183-day and Commonwealth superannuation tests are the statutory back-ups.
- Ceasing residency can trigger CGT event I1 — a deemed disposal of assets that are not “taxable Australian property” — unless you elect to defer.
- Foreign residents generally cannot claim the main residence CGT exemption when they sell an Australian home (for contracts after 30 June 2020), subject to a narrow “life events” test.
- Non-residents lose the tax-free threshold and pay foreign resident tax rates on Australian-sourced income, but are not taxed on most foreign income.
- A proposed 45-day “bright-line” residency test has been discussed but is not yet law — the four established tests still apply in 2026.
Why residency, not citizenship, is what matters
Australia taxes residents on their worldwide income and foreign residents only on Australian-sourced income. You can be an Australian citizen living abroad and still be an Australian tax resident, or a citizen who has genuinely become a non-resident. The question is decided each income year against the ATO’s tests, described on the ATO’s your tax residency and residency tests pages.
The four residency tests
You are an Australian resident for tax purposes if you satisfy any one of the following:
- The resides test (primary): does the ordinary meaning of “reside” fit — do you actually live in Australia? The ATO weighs the totality of your circumstances: physical presence, family and social ties, employment, assets, and your intention and behaviour. See the resides test.
- The domicile test: if your domicile is in Australia you are a resident, unless the ATO is satisfied your permanent place of abode is outside Australia. Establishing a permanent place of abode overseas usually needs a durable, settled arrangement, not just a long trip. See the domicile test.
- The 183-day test: if you are present in Australia for 183 days or more in the income year you may be a resident — unless your usual place of abode is overseas and you do not intend to take up residence here. See the 183-day test.
- The Commonwealth superannuation test: you are a resident if you (or your spouse, or your child under 16) contribute to certain Commonwealth public-sector schemes (the CSS or PSS). This keeps posted government employees — diplomats, military, some officials — in the Australian net. See the superannuation test.
Becoming a non-resident: it takes more than buying a ticket
To become a foreign resident you must stop meeting all four tests. In practice the domicile test is the sticking point: you must show a permanent place of abode outside Australia. The ATO looks at how long you intend to be away and actually stay, whether you have established a settled home overseas, whether you have abandoned your Australian home, and the durability of your overseas ties. Keeping an available home, family, and strong connections in Australia can keep you a resident even after you leave. Where you become a non-resident part-way through a year, you are typically an Australian resident for only part of that income year, and the tax-free threshold is pro-rated. See the ATO on living overseas and remaining an Australian tax resident.
CGT event I1: the “exit tax” you may not expect
When you stop being an Australian tax resident, CGT event I1 happens: you are treated as having disposed of each of your CGT assets that are not “taxable Australian property” for their market value at that time, and you must account for any capital gain or loss. Taxable Australian property — principally Australian real estate and certain interests in it — is excluded and stays in the Australian CGT net regardless. See the ATO on your residency status and CGT.
Instead of paying at departure, you can make an election to disregard the I1 gain or loss and continue treating those assets as taxable Australian property. The trade-off: the assets stay within Australia’s CGT reach until you actually sell them or become a resident again, at which point the full gain over the whole period is assessed. Which option is better depends on your assets, expected gains and future plans — it is a decision to take with an adviser before you leave.
Your Australian home and the main-residence exemption
One of the harshest changes for emigrants: foreign residents generally cannot claim the CGT main residence exemption when they sell an Australian dwelling. If you sign the contract of sale while you are a foreign resident, you can lose the exemption entirely — potentially for the whole ownership period, not just the years abroad. A narrow “life events” test can preserve the exemption if you have been a foreign resident for a continuous period of six years or less and a qualifying life event (such as terminal illness, death of a close family member, or divorce) occurs. For property held before 9 May 2017, transitional relief only applied to sales on or before 30 June 2020. See the ATO on the main residence exemption for foreign residents. Selling before you cease residency, or timing the sale carefully, can make an enormous difference.
How foreign residents are taxed on Australian income
As a foreign resident you are taxed only on Australian-sourced income — for example Australian rent, wages for work done in Australia, or business income sourced here. You lose the tax-free threshold and pay foreign resident tax rates from the first dollar; you are generally not liable for the Medicare levy; and many payments (such as interest, dividends and royalties) are subject to final withholding tax. Buyers of Australian real property from foreign residents must also withhold and remit foreign resident capital gains withholding at settlement. Double-tax agreements between Australia and your new country may reallocate taxing rights, so check both systems.
A note on the proposed new residency rules
The Government has previously announced an intention to modernise the individual residency rules, including a proposed primary “bright-line” test (183 days) and secondary factor tests. As at 2026 this is not law, and the four tests above continue to apply. Watch for legislative updates before relying on any 45-day or bright-line concept.
How Flyto can help
Flyto moves households from Australia to Europe and worldwide, door-to-door, coordinating packing, freight, customs and delivery around your departure timetable — useful when the date you cease residency has real tax consequences; get a quote.
Frequently asked questions
Does becoming a non-resident depend on my citizenship?
No. Tax residency is separate from citizenship and is decided against the ATO’s four tests each income year. See ATO — Residency tests.
How many tests do I have to fail to become a foreign resident?
All of them. You remain an Australian tax resident while you satisfy even one of the resides, domicile, 183-day or Commonwealth superannuation tests. See ATO — Your tax residency.
What is CGT event I1?
When you cease Australian tax residency you are treated as having disposed of your CGT assets that are not taxable Australian property at market value, triggering CGT — unless you elect to defer. See ATO — Your residency status and CGT.
Can I still claim the main residence exemption on my Australian home?
Generally not if you sell while a foreign resident, unless you meet the narrow life-events test within six years of becoming a foreign resident. See ATO — Main residence exemption for foreign residents.
Will I still pay Australian tax on my overseas salary?
Not once you are a genuine foreign resident — foreign residents are taxed only on Australian-sourced income. See ATO — Your tax residency.
Is there a new 45-day residency test in 2026?
No. A modernised bright-line test has been proposed but is not law; the four established tests still apply. See ATO — Residency tests.
Sources
- Australian Taxation Office — Residency tests
- Australian Taxation Office — Residency: the resides test
- Australian Taxation Office — Residency: the domicile test
- Australian Taxation Office — Residency: the 183-day test
- Australian Taxation Office — Residency: the superannuation test
- Australian Taxation Office — Your tax residency
- Australian Taxation Office — Living overseas and remaining an Australian tax resident
- Australian Taxation Office — Your residency status and CGT
- Australian Taxation Office — Main residence exemption for foreign residents
- Australian Taxation Office — Foreign residents and capital gains tax