Which Box Should an Australian Citizen Living Overseas Tick on the Incoming Passenger Arrival Card?
For Australian citizens living overseas, returning to Australia involves completing the Incoming Passenger Arrival Card (IPAC). This card, issued by the Australian Department of Home Affairs, gathers essential information about passengers entering Australia.
One key question on the card asks passengers to declare their tax residency status, which can lead to confusion, especially for citizens who have been living abroad for an extended period. If you are an Australian citizen living overseas and have been declared a non-resident of Australia for tax purposes, it’s important to know which box to tick when returning home.
Understanding the Importance of Tax Residency Status
Your tax residency status determines how the Australian Taxation Office (ATO) taxes you. As a general rule:
- Australian residents for tax purposes are taxed on their worldwide income, regardless of where it was earned.
- Non-residents for tax purposes are taxed only on their Australian-sourced income.
The ATO applies several tests, including the residency test, domicile test, and 183-day test, to determine whether you qualify as an Australian resident for tax purposes. If you have been living overseas and maintain a legal residence abroad, you likely qualify as a non-resident for tax purposes.
Which Box Should You Tick on the IPAC if you are an Australian Citizen Living Overseas?
On the Incoming Passenger Arrival Card, you will encounter the question:
“Do you intend to live in Australia for the next 12 months?”
This question identifies individuals who may be returning to Australia with the intention of resuming their tax residency status.
If You Are a Non-Resident for Tax Purposes:
You should tick “No” if:
- You live overseas and do not intend to reside in Australia for the majority of the next 12 months.
- Your stay in Australia is temporary, such as a holiday or short-term visit, and you plan to return to your legal residence overseas.
If Your Status May Change:
Even as an Australian citizen, if you maintain a permanent home overseas and are returning only temporarily, ticking “No” confirms your non-resident tax status. However, if your circumstances change—such as deciding to move back to Australia permanently or staying for more than 183 days—you may need to reassess your tax residency.
The Consequences of Ticking the Wrong Box
Accurately declaring your tax residency on the IPAC is crucial:
- Ticking “Yes” mistakenly may signal to the ATO that you intend to resume tax residency, potentially resulting in taxation on your worldwide income.
- Ticking “No” correctly ensures the ATO continues to recognise you as a non-resident, meaning that only your Australian-sourced income (if any) will be subject to Australian tax.
Conclusion: Australian Citizens Living Overseas and the Incoming Passenger Arrival Card?
If you are an Australian citizen living overseas and have established non-resident status for tax purposes, you should tick “No” on the Incoming Passenger Arrival Card when asked if you intend to live in Australia for the next 12 months. This will clarify your tax residency status and align with your current living arrangements abroad. Always seek advice from a tax professional if you are unsure about your specific situation, as individual circumstances can vary.
For expert guidance on your tax residency status as an Australian citizen living overseas, contact us.