JAT Volume 23 Issue 1 Article 3 – NG

AN EVALUATION OF THE PROPOSED CHANGES TO THE INDIVIDUAL TAX RESIDENCY RULES

ELIZABETH NG

Abstract

In the 2021-22 Federal Budget, the Government announced that the current individual tax residency rules will be replaced with new tests, which will be based on recommendations made by the Board of Taxation. The current residency rules are difficult to apply in practice. This is evidenced by the large number of cases and private binding rulings from 2016 to 2021 on the issue of residency, which indicate that taxpayers are seeking guidance from the Australian Taxation Office before turning to the courts to determine their residency status. The paper evaluates the extent to which the proposed residency tests are able to meet the policy objectives of equity, efficiency, and simplicity. The paper concludes that the proposed residency tests will meet the policy objectives to a large extent, and that the tests are a step in the right direction.

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