Login
iscover
Neither major party appears to have much motivation for simplifying and fixing the tax residency laws despite previous announcements from both parties, a tax specialist has said.
Newsletter
Political interest in overhauling tax residency laws has ‘disappeared’, says specialist
20 February 2025
•
7 minute read
Tax practitioners are skeptical that any real change will occur regarding the complicated tax residency laws for individuals with neither major party viewing reform in this area as a priority, according to Vantage Accounting director Michael Messner.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Speaking in a recent Under the Hood podcast episode, Messner said despite discussion from the government about modernising the tax residency rules for individuals in recent years, there’s been no real movement on this front.
Messner said it’s been around four years since the previous Coalition government announced it would replace the individual tax residency rules with a new, modernised framework, based on the model recommended by the Board of Taxation.
In 2023, the Labor government then released a consultation paper with a proposal for modernising individual tax residency.
Despite the consultation paper, Messner said neither of the last two governments have viewed addressing the tax residency rules for individuals as a priority.
“It doesn’t feel like there’s actually any want or urgency to provide reform that simplifies [these laws],” he said.
“I don’t believe it will ever become law. Here we are four years later, still talking about it.”
Messner said while there may have been a change in government, it’s the duty of both parties or any new government to communicate consistently and give clarity.
He also explained that many tax practitioners were reluctant to invest much time in reviewing any policy proposals in this area, given the lack of actual progress, particularly for individual tax residency.
He also criticised the consultation paper released in 2023 as heavily focused on “securing and potentially adding additional revenue” rather than creating simplicity and modernising the rules”.
“The reality is that you could make it simpler,” Messner said.
Tax residency in Singapore, for example, is based on a simple 183-day test, he explained.
The proposals that have been previously floated in Australia, however, may not necessarily make the rules easier, he warned.
“It would be so easy if you know that as a citizen or permanent resident, you’re in, if you’re on a temporary visa, you’re also in, but only your Australian source income is taxable. These are super simple rules, everyone could do it.”
Messner said the lack of progress in this area is placing Australia's position in the global economy under a lot of pressure.
“We’re not reforming quickly enough and there’s too much political battling and focus on raising every last dollar instead of being practical about it.”
“This is fundamentally the problem.”
You need to be a member to post comments. Become a member for free today!
