If you’re an Australian planning to work overseas, or you're already there and have been treating yourself as a non-resident for tax purposes, three recent Tribunal decisions are essential reading. All three taxpayers genuinely believed they had left their Australian tax residency behind. Two of them were wrong, atleast for part of the time in dispute, and the consequences ran into the hundreds of thousands of dollars.

This is one of the most disputed and misunderstood areas of Australian tax law, and the stakes are high: most foreign employment income earned by an Australian tax resident is fully taxable in Australia. The only way around that is to genuinely qualify as a non-resident, and as these cases show, that’s a much higher bar than simply living and working overseas for an extended period.

The two tests that actually matter for outbound workers

Australian tax residency is determined by four alternative tests, but for people leaving Australia to work overseas, two are decisive:

The “ordinary concepts” test asks the plain-English question: do you actually reside in Australia? This isn’t about where you happen to be physically, it’s about whether you’ve maintained a continuity of association with Australia. You don’t stop being a resident just by being absent. The ATO and the Tribunals look at the nature, duration and quality of your time in Australia, and crucially, whether your intention is to treat Australia as your home “for the time being.”

The domicile test is a separate, and in some ways tougher, question. Most Australians retain an Australian domicile (broadly, your permanent legal homebase) unless they’ve deliberately abandoned it. If you have an Australian domicile, you’ll be treated as an Australian resident unless you can show you've established a permanent place of abode overseas, meaning you’ve definitely abandoned your Australian residence and started living permanently (not just temporarily) somewhere else.

Here’s the trap: you can fail the ordinary concepts test (i.e. genuinely not be “residing”in Australia) and still be an Australian tax resident under the domicile tst. The two tests ask different questions, and you need to clear both to be a non-resident.

The ATO’s general rule of thumb: if your overseas posting is intended to run for less than two years, you’ll struggle to argue you've established a permanent place of abode elsewhere, but even a longer stay isn’t automatically enough.

Three recent cases, three very different outcomes

Quy's case: an extended Dubai posting

Mr Quy, anAustralian-domiciled engineer, accepted a 24-month posting to Dubai with his Australian employer in 2015. He lived there in an employer-leased apartment until early 2021, with his wife splitting her time between Dubai and the family home in Perth (where their adult daughters remained to finish their studies). He kept Australian bank accounts, superannuation, his driver’s licence, several vehicles, and two Sydney rental properties, returning to Australia for 29 to119 days each year.

The Tribunal found Mr Quy was not a resident under the ordinary concepts test; his return visits were explained by parental obligations rather than genuine ongoing attachment to Australia as “home.”

But under the domicile test, he remained an Australian tax resident. The reasons were telling: his Dubai accommodation was leased in his employer’s name, his residency permit was entirely contingent on continued employment, and he kept sentimental ties at home (a motorcycle, a 4WD, his WA driver’s licence, even his restored guitars in storage). None of this suggested he had abandoned Australia and settled permanently in Dubai; it suggested a long, but ultimately temporary, work posting.

The dispute centred on $524,943 in tax. Mr Quy lost.

Abotomey’s case: a senior executive in Shanghai, until his role changed

Mr Abotomey relocated to Shanghai in 2009 as a senior executive for an ASX-listed company, living in an employer-provided apartment. His family stayed in Melbourne, though he’d transferred his share of the family home to his wife, come off the electoral roll, and didn’t own a car in Australia. He still held an Australian driver’s licence, private health insurance, joint bank accounts, an SMSF, and club memberships.

For the 2014 income year, the Tribunal found he was not an Australian resident under either test; his seniority and the consistency of his China-based life supported agenuine, ongoing presence there, even with an employer-leased apartment.

But everything changed in 2014/2015. His executive role ended in May 2014, replacedby a narrow, time-limited consultancy with restrictive covenants. His right to remain in China depended entirely on that arrangement. From the start of the 2015 income year, the Tribunal found he had become an Australian resident again under both tests, not on the day he physically flew home in February 2015, but from when his circumstances changed and his ongoing Australian connections became significant again.

The key lesson here: your residency status can change before you even know it has, the moment your underlying circumstances shift, and the change isn’t necessarily linked to your flight home.

Evans’ case: stranded by COVID-19, and still aresident

Mr Evans was a FIFO mining worker on a four-weeks-on, four-weeks-off roster in Botswana. COVID-19 travel restrictions trapped him there for roughly ten months duringthe 2021 income year, away from his partner and three children in Australia. He rented a room informally, got a local SIM and bank account; practical, modest arrangements, nothing more.

The Tribunal found he remained an Australian resident under both tests. His absence was involuntary, driven entirely by pandemic restrictions rather than his own choice. He kept supporting his family financially, maintained the family home, retained substantial Australian assets, and had no intention of making Botswanahis permanent home. The moment travel restrictions lifted, he came straight back.

This case is genuinely good news for anyone caught in a similar bind: involuntary, externally-imposed absence, whether from a pandemic, a medical emergency, or atravel disruption, does not by itself convert you into a non-resident, provided you’ve maintained your real connections to Australia and your intention to return.

What these cases mean for you

A few practical themes emerge clearly across all three decisions:

• Employer-provided accommodation cuts against you. If your overseas home is leased in your employer’s name, paid for by your employer, and tied to your ongoing employment, that's a strong signal of impermanence under the domicile test,     regardless of how long you’ve actually been there. A visa or work permit tied to your job suggests “temporary,” not “permanent.” If you’d have no legal right to stay the moment your employment ends, that consistently weighs against establishing a genuine overseas residence.

• Family staying in Australia isn’t automatically fatal to a non-resident claim, but it’s a significant factor. Mr Quy and Mr Abotomey both succeeded in parts of their cases despite family remaining here, but only because they could point to other strong evidence of having personally, deliberately cut ties with Australia (disposing of property, leaving the electoral roll, prioritising their overseas professional life). Without that, family ties at home will usually be decisive against you.Your residency status can shift mid-stream, triggered by a change in your job, your visa, or your circumstances, not by the date you physically board a flight. If your overseas role or arrangement changes materially, it’s worth reassessing your position immediately, not waiting until you’re back on Australian soil.

• Genuinely involuntary absence won’t cost you non-resident status if you’re already established overseas and won't force resident status onto you if your real home is here. Evans’ case turned on the fact his overseas presence was forced and temporary; the opposite finding from someone who has genuinely settled abroad. The ATO is actively data-matching on this. Given how fact-dependent these determinations are, maintaining clear, contemporaneous records, accommodation arrangements, the terms of any visa or work permit, time spent in each country, your financial arrangements, and evidence of your intentions at each point in time, is essential if your position is ever challenged

If you’re working overseas, or about to

These cases confirm there is no shortcut. Genuinely establishing non-residency requiresmore than time spent away; it requires you to demonstrably abandon your Australian residence and build a permanent life elsewhere, with the paper trail to prove it. Equally, if your circumstances overseas are genuinely temporary or employment-dependent, you may remain an Australian tax resident for far longer than you expect, with all your foreign income taxable here as a result.

If you’re considering an overseas posting, already living abroad, or unsure whether arecent change in your circumstances has affected your residency status, we’d encourage you to get advice before the ATO asks the question for you. Getting this wrong is an expensive mistake; get in touch with our office to talk through your situation.

This article is general in nature and does not constitute tax advice. It discusses ATO guidance and recent Tribunal decisions current as at mid-2026. Individual tax residency determinations are highly fact-dependent; speak with us about how these principles apply to your specific circumstances.