Leaving Australia for tax: the ATO residency tests and your final tax return

For the year you leave Australia, you lodge one tax return as a part-year resident. It covers your worldwide income up to the day you stop being an Australian tax resident, plus any Australian-sourced income after that. You get a reduced tax-free threshold, resident tax rates apply, and ceasing residency triggers a deemed disposal of many of your assets for capital gains tax.

The hard part is working out the day you stop being a resident. The ATO decides that on the facts of your life, using four tests, and the answer drives everything else in the return.

This guide is general information as at October 2026, drawn from ato.gov.au. It is not personal tax advice. Your residency, your assets and your income all change the result, so have a registered tax agent prepare or review the return for the year you leave.

How does the ATO decide if I am still an Australian resident?

The ATO uses four tests, set out on its tax residency page. Its rules differ from those of the Department of Home Affairs, so your visa and citizenship do not decide your tax residency.

1. The resides test. This is the primary test. If you reside in Australia under the ordinary meaning of the word, you are a resident and the ATO does not look further. It weighs your physical presence, your intention and purpose, your family, your business or employment ties, where you keep your assets, and your social and living arrangements. The ATO says no single factor is likely to be decisive.

2. The domicile test. If you do not reside in Australia, you are still a resident if your domicile is in Australia, unless the ATO is satisfied that your permanent place of abode is outside Australia. The ATO’s domicile test page says that if you have always lived in Australia, you keep your Australian domicile while you are overseas unless you choose to migrate permanently. For most Australians moving to Dubai, the question becomes whether Dubai is now your permanent place of abode. The ATO looks at your intended and actual length of stay, whether you have an established home overseas, whether you keep a residence in Australia, and your family and financial ties.

3. The 183-day test. If you are in Australia for more than half the income year, you are a resident unless your usual place of abode is outside Australia and you have no intention of taking up residence here. The ATO counts the day you arrive and the day you leave, and the test runs on the income year from 1 July to 30 June.

4. The Commonwealth superannuation test. This covers Australian Government employees at Australian posts overseas who contribute to the CSS or PSS schemes, and their families. It will not apply to most people moving to Dubai for work or business.

The ATO gives an example that matches many Dubai moves. Bronwyn takes a three-year overseas contract with an option to extend, moves with her husband and three children, rents a house abroad and rents out the family home in Australia. The ATO treats her as a foreign resident. She fails the resides test because of the length of her absence and the home she set up overseas, and she fails the domicile test because her permanent place of abode is now outside Australia.

The ATO also cites a 2013 tribunal decision: a person who fails to cut their connection with Australia will be treated as an Australian resident. Our guide Am I still an Australian tax resident after I move to Dubai? goes further into the ties that keep people resident.

Tax return when leaving Australia permanently: what changes

Your return for the year you leave splits the year at the date you stop being a resident.

Before that date, you are a resident. You declare your worldwide income, including any salary from a Dubai job that started before your residency ended. The ATO says Australian residents working overseas must declare all their foreign employment income.

After that date, you are a foreign resident. The ATO says you no longer need to include foreign-sourced income in your Australian return. Australian-sourced income, such as rent from a property you keep, stays taxable in Australia.

Your part-year tax-free threshold

You only get the tax-free threshold while you are a resident. The ATO’s page on becoming a foreign tax resident sets the part-year threshold as:

$13,464 plus ($4,736 divided by 12, multiplied by the number of months you were an Australian resident, counting the month you left)

If you stop being a resident in March, you count nine months, July to March. Your threshold is $13,464 plus $3,552, which is $17,016. Resident tax rates apply to your taxable income for the year.

Capital gains tax when you leave Australia

When you stop being an Australian resident, the ATO treats you as having disposed of your CGT assets at their market value on that date. It calls this a deemed disposal. You can owe tax on gains you have not cashed in.

The rule leaves out taxable Australian property, which includes Australian real estate. Foreign residents stay subject to CGT on that property, so the ATO deals with it when you sell. Shares, managed funds and crypto are the assets the deemed disposal usually catches.

The ATO’s page on how changing residency affects CGT explains the alternative. You can choose to disregard all the capital gains and losses from the deemed disposal. Your assets then count as taxable Australian property until you sell them or become a resident again, so later growth in their value stays inside the Australian CGT system. You make the choice in the way you prepare your return. Two points to weigh with your tax agent:

• if you have been a resident for the whole time you owned an asset, you can claim the full 50% CGT discount on its deemed disposal
• if you sell an asset bought after 8 May 2012 while you are a foreign resident, you lose the full discount and may only get an apportioned one.

Our guide Does moving to Dubai trigger capital gains tax in Australia? covers the deemed disposal in more depth.

Your Australian home

Check the main residence exemption before you sell or rent out your home. The ATO’s page on the main residence exemption for foreign residents says that if you are a foreign resident when you sell, you cannot claim the exemption, in full or in part, unless you meet its life events test. That test covers a terminal medical condition, the death of a spouse or child under 18, or a sale under a formal agreement after a relationship breakdown, during a period of foreign residency of six years or less. The timing of a sale against your departure date matters, so get advice before you list the property or sign a lease.

Can I lodge my tax return before leaving Australia?

Sometimes. The ATO’s page on lodging before you leave accepts an early return before 30 June from an Australian resident who:

• is leaving Australia
• is ceasing to be an Australian resident for tax purposes
• will no longer earn Australian-sourced income, other than interest, dividends and royalties.

You must lodge in the normal period, 1 July to 31 October, if you are not leaving permanently, will keep earning other Australian-sourced income after you go, or have a HELP, VET Student Loan or Australian Apprenticeship Support Loan debt.

Early returns go on the paper form, and the ATO allows 50 business days to process them. Collect a payment summary or your income statement in myGov from each employer, because the ATO says payslips are not sufficient. The ATO will post your notice of assessment to the address you give on the return, so use one that will reach you.

How do I lodge my Australian tax return from Dubai?

Most people lodge after they arrive. The ATO’s page on lodging from outside Australia gives these options:

• lodge online with myTax, through a myGov account linked to the ATO, with a sign-in method that works overseas (the ATO recommends a Digital ID such as myID)
• lodge through a registered tax agent, who may have a later due date under their lodgment program
• lodge a paper return
• have a friend or family member lodge for you, with a power of attorney if they sign it.

You need an Australian bank account to receive a refund. Keep one open when you leave.

What else should I tell the ATO when I leave?

If you have a HELP, VSL or AASL debt, update your contact details and submit an overseas travel notification within 7 days of leaving, if you intend to live overseas for 183 days or more in any 12 months. You then report your worldwide income each year by 31 October, or lodge a non-lodgment advice. The ATO’s overseas repayments page explains the process. Your loan keeps being indexed until you repay it.

Your banks and brokers need to know you are a foreign resident and need your overseas address. The ATO’s page on bank accounts says banks withhold tax from interest paid to foreign residents: 10% if the bank has your overseas address, 47% if it does not. You do not then include that interest in your Australian return. Australia has no tax treaty with the UAE to reduce withholding rates. The Treasury list of Australia’s income tax treaties does not include the UAE.

Medicare. Foreign residents do not pay the Medicare levy. While you are still a resident, the Medicare levy surcharge can apply if you cancel private hospital cover and your income is above the threshold, so check the timing of any cancellation with your health fund.

Your checklist for leaving Australia for tax

1. Write down the facts the ATO weighs: where your family lives, what happens to your home, how long your Dubai contract or visa runs, and what ties you keep.
2. Agree a likely date of ceasing residency with a registered tax agent.
3. List every CGT asset and its market value on that date, and decide with your agent whether to accept the deemed disposal or make the choice to disregard it.
4. Decide what happens to your home before you list it or rent it out.
5. Submit an overseas travel notification within 7 days if you have a study loan.
6. Tell your banks and brokers you are a foreign resident and give them your Dubai address.
7. Set up myID and keep an Australian bank account for refunds.
8. Lodge your part-year return, early on paper if you qualify, or in the normal period.
9. Keep a dated record of your days in and out of Australia from the day you leave. RezTally, our own app, does this.

Your super has its own rules; see Superannuation when you move to Dubai. The UAE side of the move, from your visa to your bank account, is set out in Moving to Dubai from Australia.

How we help

We do not prepare Australian tax returns or give Australian tax advice. We handle the UAE side: the company or employment visa, the Emirates ID, the tenancy and the bank account that give your Dubai life the shape the ATO looks for. We work alongside your registered tax agent so the dates on both sides match. To plan the order of your move, contact Alan; he replies within one working day.