Australia's Working Holiday Resident Test Guide
If an Australian Working Holiday visa holder is classified as a resident for tax purposes, at least one of the two options below must be satisfied.
If you are unsure of your residency in Australia, please refer to the resident example towards the bottom of the page under section 2.
1. Your life and work must continue to take place in Australia so that Australia can be deemed as your usual place of abode.
If I can explain it more easily:
"I live in Australia" can be regarded as an Australian resident.
"I came to work for a bit but also to spend some leisure time in Australia" will be considered a non-resident for tax purposes in Australia.
To become an Australian resident, your purpose in Australia must be to settle down and live in Australia permanently, and you must also show how you settled or plan to live in Australia. If you look at example 1 below, it is an example of a resident.
The more applicable the following information is to you, the more likely you are to be classified as a resident.
1) Home rental contract or home purchase
2) A membership card or photo of yourself participating in a local club, church or social group in Australia
3) Key assets - Not only do you have a bank account to receive your wages in Australia, but you also own expensive assets such as investments, motor vehicles, personal assets (furniture, appliances, etc.)
4) The presence of family members or relatives - It's not just a trip with your girlfriend or boyfriend, it's about whether you have a family member to stay with for a long time in Australia. Simply coming into Australia to visit your relatives or family members does not make you a resident, what's more important is if you are willing to and have plans to live for a long time in Australia.
5) Whether you have applied for another visa - Whether you have applied for a long-term visa such as a student, 457 or partner visa is important when it comes to the residency test.
2. You must have stayed for at least 183 days during the Australian financial year. You must have no other place to live outside of Australia and it is important that you are willing to continue to live in Australia.
You would become a non-resident if you're only intending to travel, study and work in Australia for 7 months and you have a home country to return to in the end.
However, if you plan to stay in Australia for a long period on a Working Holiday visa and you have received a sponsor offer from a specific employer, or if you came to Australia with an intention to obtain permanent residency in Australia, you will become a resident upon arrival.
Resident example 1)
Kim Chul-soo, who came from Korea, was dreaming of wanting to immigrate abroad when he was young. One day, he got very attracted to Australia as he immediately made his way to Australia on a Working Holiday visa with only one backpack and one suit case.
Chul-soo transferred money from Korea into his Australian bank account which he opened after his arrival in the country. He signed a contract with an Australian materials company based in Melbourne and worked there for 6 months and joined and participated in a local soccer team. Also, to improve his English skills, he enrolled into an Australian language course and studied English whenever he had free time.
However, although he wanted to continuously live in Melbourne, due to the expensive rental cost, he couldn't get a rented house and instead decided to stay in a share house.
By the end of the Working Holiday visa, Mr. Chul-soo collected enough data and obtained immigration references. He has also taken sufficient steps (such as legal counselling and/or school counselling) to apply for a new visa. Furthermore, he is going to return to his parents' home in Korea and come back to Australia on a new visa.
In this case, from the time Chul-soo arrived in Australia on a Working Holiday visa, he is classified as an Australian resident.
Resident + Non-resident Example 2)
Yang Sook, from Korea, planned to leave Australia after travelling around the country without a permanent housing but then she received the Second Working Holiday form. Towards the end of First Working Holiday visa, Yang Sook met her Australian boyfriend John and fell in love, making her withdraw her plans to return as she instead decided to extend her Second Working Holiday visa for a further 12 months. Moreover, while staying with John's family, Yang Sook started working at a local café.
In this case, she is classified as a non-resident up until the time she applies for a Second Working Holiday visa and a tax resident after she applies for a Second Working Holiday visa.
Resident + Non-resident Example 3)
Bizon is a Working Holiday maker from Sweden. He was going to travel all over Australia and around Australia before returning to Sweden, but the company he was working for offered to give him an ENS or 457 visa and asked Bizon if he was willing to continue working. Bizon, who liked Australia very much, extended his work in Australia for another 12 months.
In this case, Bizon was a non-resident prior to his employer making an offer to him and a resident from the time the contract was signed.
However, if Bizon's initial intentions were to continuously live in Australia because he liked Australia, he could be categorised as a resident from the time he started his work at the company.
Non-resident example 1)
Robert, who lived with his parents in Italy, came to Australia on a Working Holiday visa and stayed at his uncle's house for three months while working and then moved to Victoria, where he spent another two months at a share accommodation. Since he received a Second Working Holiday visa, he had strong intentions to remain in Australia and actually stayed in Australia for 12 months at his uncle's house. During this time, Robert also travelled to Fiji and although he bought a motor vehicle, Robert had plans to sell it prior to leaving Australia.
Although Robert has lived in Australia for 17 months, he is no longer willing to live in Australia and has a home country to return to, making him a non-resident.
Non-resident example 2)
Erin and Sean, a couple from Ireland, came to Australia for the purpose of work and travel after completing their respective degrees in their home country. With a strong intention to travel further around Australia, they received their Second Working Holiday visa while they travelled around Queensland, NSW and VIC and during this period, they continued to move across the states while working. These two had their parents' home which they could return to if they were to go back to their home country.
Erin and Sean are classified as non-residents because they have continued to travel across Australia during their stay.
As you can see from the examples above and from the ATO homepage, the problem revolving around Australian Working Holiday makers in terms of their residency is very ambiguous. There is no specific law which guarantees that Working Holiday Makers are 100% tax residents.
Therefore, it seems to be a good idea to thoroughly check and report this part before applying, and if a tax audit needs to be conducted, you should sincerely cooperate to the investigation.
And if you are not a Working Holiday Maker but still need to determine if you are a resident, please refer to the following link.
https://blog.naver.com/pnctax/50189325265