Ask anyone “Where do you live?” and the answer that you get will more often than not tell you where their residence is. For thousands of visitors to our shores who do derive some income while they are visiting Australia the answer which relates to residence is crucial in determining what tax they pay, although my experience indicates they are usually more interested in what tax they will get back.

The question of residence is very important to the Tax Office.

Non residents get no tax free income in Australia. The first dollar they earn is taxed at 29% which is 29 percentage points higher than residents pay on their first $6000 earned and 12 percentage points higher than the next $14,000 odd that is earned.

You cannot have residency of two countries simultaneously although you may have citizenship of two countries at the same time. Tax liability follows residency.

As with all of our Tax Act there are exceptions. The exceptions do not include backpackers, even those with a work permit. We have seen in our office many backpackers who have worked for six months or so and they are very disappointed to learn ( especially when they have been taxed incorrectly as residents ) that if they lodge a tax return they will get a bill before catching the plane home.

The exceptions do include working students, even those who are restricted to the number of hours they are allowed to work.