ATO provides examples to illustrate Tax Residency for Individuals rules

ATO provides examples to illustrate Tax Residency for Individuals rules


On 6 October 2022, the ATO released a Draft Ruling TR 2022/D2, which provides some clarification of the ATO’s view of individual tax residency and the relevant tests. 

With the increase in flexible working alternatives, changes in international working arrangements, the uncertainty surrounding COVID-19 and the border restrictions that have been put in place over the recent years, the question of tax residency has become increasingly relevant and contentious.

The new ruling, TR 2022/D2, which replaces former rulings IT 2650 and TR 98/17,TR 2022/D2 does not appear to re-write the rule book but provides some firmer language on some of the ordinarily resides concepts and the factors to be considered. A contemporary interpretation of the existing legislation, it includes 14 modern examples to assist in understanding the ATO’s current view of the individual tax residency rules.

It also takes into account recent developments in case law, including but not limited to Harding v Commissioner of Taxation [2019] FCAFC 29, Pike v Commissioner of Taxation [2019] FCA 2185 and Addy v Commissioner of Taxation [2019] FCA 1768.

The ruling does not, however, provide a primary ‘bright line’ test as proposed by the former Government in the 2021-22 Federal Budget.

The primary ‘bright line’ test is where a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident. It is unknown whether the current Federal Government will continue with the previous Government’s proposed changes to replace the individual tax residency rules and introduce a ‘bright line’ test.

The ATO is seeking comments and feedback by 25 November 2022.

Key takeaway

The devil is still in the ‘facts and circumstances’ of individual cases. Whilst the Draft Ruling steps through 14 examples, each situation comes down to the particular facts and circumstances of the specific taxpayer, and varies for each person.

The SW Tax team is keen to see whether the upcoming Federal Budget; the first for the new Federal Government, will shed any further light on likely future developments.

How can SW help?

Reach out to your SW advisors if you would like more information about your tax residency or what the Draft Tax Ruling might mean for you.


Justin Batticciotto, Associate Director, Tax

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