Understanding Tax Residency for Australian Expats in Thailand

Tax residency is a key factor in determining where you must file tax returns and which country has the right to tax different types of income, such as pensions and superannuation. However, this is an area of confusion for many Australian expats, as residency is determined by specific rules under both Australian and Thai tax law and further clarified by the Australia-Thailand Double Tax Agreement (DTA).

Navigating these rules isn’t always straightforward, as tax residency impacts compliance, financial planning, and tax obligations. That’s why confirming your residency status is important rather than assuming or choosing one. We hope this article helps provide some useful guidance.

Thai Tax Residency

If you stay in Thailand for 180 days or more within a tax year, you are considered a Thai tax resident. The tax year follows the calendar year in Thailand. When counting days, include any part of a day you are in the country.

More information on Thailand’s Tax Residency Rules

How Australian Tax Residency is Determined

The Australian Taxation Office (ATO) applies four tests to determine whether an individual is a tax resident of Australia:

1. The Resides Test: If you live in Australia and maintain a home there, you are an Australian tax resident.
2. The Domicile Test: If your domicile (legal permanent home) is in Australia, you are an Australian tax resident unless you have established a permanent place of abode outside Australia.
3. The 183-Day Test: If you spend 183 days or more in Australia in a financial year, you are generally considered a tax resident unless you can prove you have a usual place of abode overseas. However, if you also meet Thai tax residency criteria, the DTA tie-breaker rules determine your final tax residency status.
4. The Superannuation Test: If you are a member of certain Australian government superannuation schemes, you are automatically considered an Australian tax resident.

These tests mean that even if you live in Thailand, you may still be considered an Australian tax resident if you have not established a permanent place of abode outside Australia.

You can apply the ATO Residency Tests to your situation here

The Australia-Thailand Double Tax Agreement (DTA Tie-Breaker Rules)

If both Australia and Thailand consider you a tax resident under their domestic laws, the Australia-Thailand Double Tax Agreement (DTA) resolves the issue using tie-breaker rules under Article 4. These rules determine which country has the exclusive right to tax you based on:

1. Where you have a permanent home:  If you have a permanent home in only one country, you are deemed a tax resident of that country. The next tie-breaker rule applies if you have a permanent home in both.
2. Where your habitual abode is: Spending more time in Thailand than in Australia may indicate Thai tax residency.
3. Where your personal and economic ties are strongest – Factors such as family, business, and financial interests are considered.
4. Nationality – If other factors do not resolve the issue, nationality may be the deciding factor.

You can read the Australia-Thailand DTA here

Taxation of Age Pensions and Superannuation Under the DTA

The DTA overrides domestic tax rules when determining where certain types of income are taxable.

For Australian Age Pensions and superannuation:

• If you are deemed an Australian tax resident under the DTA, your Australian Age Pension and superannuation are only taxable in Australia, and you do not need to declare them in Thailand.
• If you are deemed a Thai tax resident under the DTA, your Australian Age Pension and superannuation are only taxable in Thailand, and Australia does not tax them. However, you may still need to file an Australian tax return depending on your overall Australian-sourced income. Note that lump sum superannuation withdrawals may have different tax treatment. 

Retaining Australian tax residency offers clear benefits for retired Australians, making it essential to understand the rules and your status. Knowing your tax residency is crucial for filing the correct tax return and ensuring compliance.

What Should Australian Expats in Thailand Do?

• Use the ATO’s Residency Tests to determine your Australian tax residency status: ATO Residency Tests
• Records and Confirmation: If you spend more than 180 days a year in Thailand but retain Australian tax residency, keep clear documentation of your tax position. If necessary, seek a tax residency ruling from the ATO to clarify your status.
• Seek Professional Tax Advice: If you are unsure about your residency status or obligations under the DTA, consult a tax professional to clarify your position
• Stay Compliant with Tax Filing Requirements: If you remain an Australian tax resident, even if you live in Thailand, you may still need to file an Australian tax return.

If you need further assistance in determining your tax residency and understanding your obligations under the Australia-Thailand DTA, book a paid consultation for professional guidance.

More Resources for Australian Expats

INSIGHTS: Tax Advice for Australian Expats in Thailand

WATCH: Thailand-Australia DTA: Tax Planning Essentials for Australian Expats in Thailand

WATCH: Understanding the Taxation of Superannuation and Australian Pensions in Thailand

INSIGHTS: Taxation of Overseas Pensions in Thailand: A Comprehensive Guide