How the ATO Weighs Conflicting Evidence When an Australian Expat’s Own Actions Contradict Their Stated Residency Intention

When an Australian expat says they have left Australia for good but still holds an Australian bank account, an active lease, and a family home sitting empty, the Australian Taxation Office does not take their word for it. According to ATO guidance, particularly Taxation Ruling TR 2023/1, an individual’s objective behaviour and actions carry more weight than their stated intentions. If what someone does contradicts what they say, the ATO builds its residency conclusion from the facts of their daily life, not their claimed mindset. That single principle explains why so many residency disputes turn not on what the taxpayer intended, but on what their bank statements, travel records, and lease agreements actually show.

TL;DR

• The ATO does not accept stated intention at face value. It weighs objective, verifiable evidence (bank accounts, leases, travel patterns, family location) more heavily than what a taxpayer says about their plans.
• Taxation Ruling TR 2023/1 replaced older guidance (IT 2650, TR 98/17) and confirms there are no bright-line rules for borderline residency cases.
• Four statutory tests apply: the Resides Test, the Domicile Test, the 183-Day Test, and the Commonwealth Superannuation Fund Test.
• Case law such as Harding, Pike, and Addy shows courts resolve contradictions by looking at where someone has actually built their day-to-day life, not where their assets happen to sit.
• In most residency disputes, the taxpayer carries the burden of proving their position, not the ATO, which makes contemporaneous documentation critical.

About the Author: This article is published by ODIN Tax, a Registered Australian Tax Agent that has prepared tax residency determinations and non-resident tax returns for 2,300+ Australian expats across 40+ countries, led by Tax Director Pau Lam, who has spent over a decade working exclusively on Australian expat tax matters.

What Does the ATO Actually Look At When Intention and Behaviour Don’t Match?

The ATO’s starting position is straightforward: actions are evidence, words are claims. When a taxpayer tells the ATO they intended to permanently relocate overseas but their conduct suggests otherwise, the ATO treats the conduct as the more reliable indicator. This is not a matter of the ATO doubting honesty. It is a recognition that intention is internal and unverifiable, while behaviour leaves a paper trail.

Objective factors the ATO weighs include:

• Whether Australian bank accounts remain open and active, or dormant
• Whether a lease, mortgage, or owned home in Australia is occupied, rented out, or left vacant
• Where a spouse and dependent children are physically living
• The pattern and frequency of return trips to Australia
• Where professional, social, and community ties are maintained
• Employment arrangements, including whether the role is based overseas on a genuine long-term basis

Think of it the way a court assesses whether a marriage has actually broken down despite both parties still filing joint tax paperwork. The paperwork might say one thing, but the court looks at whether the couple lives together, shares finances day to day, and behaves like a household. Residency works the same way: the ATO is not interested in the label, it is interested in the lived pattern underneath it.

Which ATO Tests Determine Residency, and Why Does That Matter for Conflicting Evidence?

Building on the principle above, the next question is which specific tests the ATO applies once it starts weighing that evidence. The ATO uses four statutory tests to determine tax residency. The Resides Test looks at physical presence and the continuity of a person’s association with Australia. The Domicile Test treats someone as a resident if they are domiciled in Australia, unless they can show their permanent place of abode is genuinely overseas. The 183-Day Test deems someone a resident if they are present in Australia for more than half the tax year, unless their usual abode is overseas and they have no intention of residing in Australia. The Commonwealth Superannuation Fund Test applies to residents contributing to specific government super schemes, largely relevant to current or former Commonwealth government employees.

Each test has a different evidentiary trigger, which is exactly where conflicts tend to surface. A taxpayer might fail the Domicile Test because their “permanent place of abode” claim doesn’t hold up against a family home sitting unrented in Sydney, even while their absences overseas seem to support non-residency under the 183-Day Test. This is why the ATO tax residency test framework is not one test but four overlapping filters, and inconsistency between what a person claims and what one test’s objective criteria reveal is often the first thing that triggers a closer review.

How Did TR 2023/1 Change the Way the ATO Handles These Disputes?

A related but distinct question is what changed in the guidance itself. Taxation Ruling TR 2023/1 is now the primary ATO guidance for weighing intention against actual residence, having replaced older rulings including IT 2650 and TR 98/17. Its central contribution is blunt: there are no bright-line rules for borderline cases. Instead, the ATO requires a holistic review of a person’s physical presence, behaviour, and objective intention to treat Australia as home.

This matters because it closes off the idea that any single fact, like renting out the family home or spending fewer than a set number of days in Australia, automatically settles residency. The ruling asks the ATO (and the courts) to build a full picture. In practice, that means a taxpayer cannot rely on one favourable data point while ignoring several others that point the opposite way. The whole pattern gets assessed together.

What Do the Court Cases Actually Show About Resolving Contradictions?

Stepping back from the ruling itself, case law shows how this holistic test plays out when it is actually litigated. Key precedents include Harding v Commissioner of Taxation, Pike v Commissioner of Taxation, and Addy v Commissioner of Taxation. These cases establish that courts resolve factual contradictions by weighing the objective realities of a taxpayer’s day-to-day life, such as establishing a genuine permanent place of abode overseas, rather than relying solely on stated intentions or the fact that Australian assets were retained.

The practical lesson from this line of cases is that retaining Australian property, an Australian bank account, or even family ties does not automatically defeat a non-resident claim, but it does raise the evidentiary bar. The taxpayer needs a coherent overseas life story: accommodation, work, and social integration overseas that collectively outweighs whatever Australian threads remain. A single overseas lease with no other supporting facts is unlikely to survive scrutiny if everything else points back to Australia.

Who Has to Prove Their Residency Position If the ATO Disagrees?

Building on the above, a harder and more practical question is what happens once a dispute actually arises. In most ATO tax disputes, including residency determinations, the taxpayer carries the burden of proof, not the ATO [aptumlegal.com.au]. That means it is not enough to have a plausible story; the taxpayer needs to produce documentary evidence that substantiates it, upfront and in detail.

This is where cross-border data matching adds pressure. The ATO increasingly draws on international exchange frameworks, including the Common Reporting Standard and Foreign Account Tax Compliance Act data, to cross-check what taxpayers report against financial account information reported by foreign institutions [accountantsdaily.com.au]. If a person claims non-residency but foreign account data, property records, or travel movements tell a different story, that gap is now far easier for the ATO to detect than it was a decade ago.

What Should Expats Do to Avoid Their Own Evidence Working Against Them?

Given the burden of proof sits with the taxpayer, the sensible response is to build the evidence file before it is ever needed, not after a review letter arrives. A few practical habits make a material difference:

• Keep a contemporaneous record of travel dates, overseas lease agreements, and employment contracts rather than reconstructing them retrospectively
• Close or clearly repurpose Australian accounts that no longer reflect genuine ongoing use, or be prepared to explain why they remain active
• Document the overseas home as a genuine, ongoing place of abode, not a short-term arrangement
• Review CGT exposure early if Australian property is retained. Under current tax law, non-residents do not qualify for the 50% CGT discount available to residents and may be subject to the 15% foreign resident CGT withholding on property sales
• Track foreign income and tax paid overseas carefully, since a foreign income tax offset claim under the relevant double tax agreement Australia has signed with the country of residence depends on clean records

This is also where property ownership and residency status intersect most sharply for expats with an income profile that involves Australian real estate. Getting the residency call wrong doesn’t just affect income tax; it flows directly into capital gains tax non-resident calculations and withholding obligations at settlement.

Frequently Asked Questions

Does keeping an Australian bank account automatically make me a tax resident?
No single factor is automatically decisive. TR 2023/1 requires a holistic assessment, but a retained account is one data point the ATO will weigh alongside everything else.

Can I be a tax resident of Australia and another country at the same time?
Yes, dual residency can occur. This is exactly what a double tax agreement Australia has with the other country is designed to resolve, typically through tie-breaker rules and a foreign income tax offset.

Do I need to lodge a non-resident tax return Australia requires if I have Australian rental income?
Generally yes. Non-residents with Australian-sourced income, including rental income, are required to lodge a non-resident tax return Australia even if their main income is earned overseas.

What happens if the ATO disagrees with my residency claim?
Since the taxpayer carries the burden of proof, you would need to substantiate your position with documentary evidence covering physical presence, accommodation, and behaviour patterns [aptumlegal.com.au].

Is there a simple day-count rule for residency?
No. The 183-Day Test is one of four tests, and it has its own exception where usual abode is overseas. There is no single day-count that guarantees non-resident status.

Does selling Australian property as a non-resident trigger extra withholding?
Yes, in many cases the 15% foreign resident CGT withholding applies to property sales, separate from the final capital gains tax non-resident liability calculated at tax return time.

This article is general information only and does not constitute personal tax advice. Residency outcomes depend on individual facts and circumstances, and should be assessed through a formal consultation with a Registered Australian Tax Agent.

About ODIN Tax

ODIN Tax is a Registered Australian Tax Agent practice built specifically for Australian expats and non-residents, part of ODIN alongside ODIN Mortgage. Led by Tax Director Pau Lam, with more than a decade of specialist expat tax experience, ODIN Tax has served 2,300+ Australian expats across 40+ countries and holds a 4.9/5 Google rating from 400+ verified reviews. Headquartered in Hong Kong rather than trying to service expats remotely from Australia, the team specialises in tax residency determinations, non-resident CGT, foreign resident CGT withholding, and foreign income tax offset claims across 40+ double tax agreement countries, areas where generalist accountants routinely get the details wrong.

If your residency position involves conflicting facts, whether that’s an Australian property, family ties, or accounts you haven’t closed, getting an early, documented assessment matters more than a confident guess. Get in touch with ODIN Tax at https://www.odintax.com/ to talk through your specific circumstances.