# tax advice/ income tax, resident or non w 457



## LACali2Melbourne457 (Apr 30, 2011)

I'm trying to determine a SEEMINGLY simple question:
I am coming to Au, Melbourne on a 457 Visa (company sponsored)
Will I be taxed as a resident or non resident?

I have the intention of working for at least 2 years but no more then 4 years. 
I would like to do a salary LAFHA package unless doing so changes my filing status to non resident:
Very confusing because a condition of LAFHA is that you must intend to return to the US or location you declare as your "permanent residence" 

Then 
ATO gives this criteria: 
"Generally, you are an Australian resident for tax purposes if any of the following applies:"

* you have always lived in Australia
* you moved to Australia and live here permanently
* you have been in Australia continuously for six months or more, and for most of the time you have been
o in the same job, and
o living in the same place
* you have been in Australia for more than half of the financial year, unless
o your usual home is overseas, and
o you do not intend to live in Australia.

While i would be in Australia for 1+ years I would not be permanent but I would be there for over 6 months, living and working in the same place. 

i just finished speaking with an accountant that told me I would file as a non-resident but he said "he's not an expert on that arena of tax expertise, immigration or Visa holders"
PLEASE HELP!!! or refer someone who can??


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## amaslam (Sep 25, 2008)

You would be taxed as a non-resident.

This page clears up what a resident is:
Residency


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## LACali2Melbourne457 (Apr 30, 2011)

amaslam said:


> You would be taxed as a non-resident.
> 
> This page clears up what a resident is:
> Residency



Thank you for your response:
I read all of the material and then went on to read specific definitions and criteria and still it seems that I will presently residing and therefore a current "resident" not vacationing or traveling around but having a permanent place of work/living routine for a period up to 4 years (visa limit) 

Although time isn't the only factor the secondary factor seems to also indicate I would be a resident?

18. The period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here. 

It's frustrating as heck....


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## amaslam (Sep 25, 2008)

To me this is the tricky bit:
* you have been in Australia for more than half of the financial year, unless
o your usual home is overseas, and
o you do not intend to live in Australia.

***
I think ATO also looks at the behaviour (i.e. accounts opened, property purchased) to see whether you are acting more in line with the definition of a 'resident' or a 'non-resident'.

So my previous non-resident statement can certainly be challenged. 

***
Let me give an example.

1. You come to Australia to work on a 457, meanwhile your spouse and kids remain back in the USA and you remit funds back to the USA to support them. You keep ownership of the house they live in back in the US.
2. You rent accomodation in AU

In that case I would say you are non-resident

Another example:

1. You come to Australia on a 457
2. You and your spouse and kids all move to Australia
3. You rent/purchase a place to live in Australia
4. You sell your home/place in the USA
5. You have active accounts and income mainly from Australian sources

In that case I would say you're acting like a resident. 

So the individual circumstances and how you act with your possessions
and funds does play a part in this. 

I'm not a tax expert or law professional so what I express here is my understanding of it. 



LACali2Melbourne457 said:


> Thank you for your response:
> I read all of the material and then went on to read specific definitions and criteria and still it seems that I will presently residing and therefore a current "resident" not vacationing or traveling around but having a permanent place of work/living routine for a period up to 4 years (visa limit)
> 
> Although time isn't the only factor the secondary factor seems to also indicate I would be a resident?
> ...


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## yks (Jan 24, 2011)

HI There.

I have had this problem before.

Did a extensive reserch.

First of all let me tell you , People who are here on 457, many of them Claim LAHFA.

As they can prove that their intend was never to settle down here and to go back to thier country after the assignment is finished.

I rang up ATO,
They said 
"Its totally on the discrition of your employer if they want to give you LAFHA or not"

Then i called up my company's Accountant.

and this is what i got in reply
"Under tax rulings you are a resident of Australia for tax purposes from my understanding you are on a two year work visa – as your intention was to work here for more than six months you are regarded as a resident for Australian Taxation purposes. This information is readily available on the ATO website (Australian Taxation Office Homepage) under Individuals>International tax essentials>Advanced topics>Residency."

Even though i told him that there is fren of mine who is here on 457 for last 3 years and he has been claiming LAFHA with out any issues.

Still i couldn't manage to convince them.

another mail which i got from my employer:

LAFHA is paid to an employee who has his place of work changed by his employer - if Company sent you to work in Canberra for three months you would be entitled to receive it. We do not have an office in your homeland so your place of employment is Sydney and unless we request that you work for company in another location you are not entitled to receive it. 

So i would say all the very best.
there is no hard and fast rules which can determine if you are resident from the tax pupose.
If you are on 457 , then the biggest criteria you satisfy is you intend to go back to your country after the assignment is finished.

Neither will ATO come and sue you that your are a resident and you are claiming LAFHA 
So try your best to take it.


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## Glenhope (Mar 4, 2009)

yks said:


> HI There.
> 
> I have had this problem before.
> 
> ...


Another angle you may want to consider is the tax implications of being resident/non-resident. If you have extensive tax-free income outside Australia, as non-resident this would be free of Australian tax, but you would pay tax on your Australian income at higher rate than as resident. As resident, any income outside Australia is taxable, but you get a tax credit from any overseas tax paid.
On 100K tax as resident is 25,450.00, non-resident $31,250.00. I know which I would choose.


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## GlobalIndian (Mar 1, 2012)

Hi, Just in case somebody would want to refer the Income Tax slab for Australia.. here's the link : Individual income tax rates


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## Overhear (Jun 3, 2013)

This is an old thread, but I've been grappling with the same question about determining my tax status on a 457 visa.

Despite the very clear explanation on the Ato website -- including an online test for determining your status -- there is absolutely no mention of the *Foreign Income Exemption for Temporary Residents*. 

Although 457 holders would seem to mostly be considered residents for tax purposes, the Foreign Income Exemption for Temporary Residents exempts those who "hold a temporary visa granted under the Migration Act 1958" from having to pay taxes on capital gains and dividend income earned outside of Australia.

i'm a new member and can't post links, but a web search for Foreign Income Exemption for Temporary Residents ATO should get you to the ATO's webpage.


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## subs00 (Aug 7, 2015)

*TAX issue*

Hi,
I recently got my 457 visa. It's not even a month I have got a better opportunity in my home country. So I am planning to go back soon. That means I worked under the 457 visa for 1 month only. I have still not registered myself in Tax office and super. Also my company was planning to give me my super quarterly.
In this situation do I need to pay the tax and what happens of my super.

Subs


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