
Tax Residency for Arborists: What It Means for Your Business
Tax residency for arborists can have a real impact on your business, especially when it comes to tax obligations, cash flow, and the day-to-day pressures of running a tree services operation in the ACT. If you’re an arborist or tree services business owner in the ACT, you already know how tough it can be to stay ahead financially. But there’s another challenge that can affect your take-home pay, cash flow, and even your plans for retirement: understanding your tax residency status.
A lot of arborists are so busy managing staff, sorting cash flow or chasing late payments that questions around tax residency often slide down the list. But it directly shapes how much tax you pay, which deductions you’re allowed, and how you plan for your business’s future. In this article, we break down tax residency for arborists using plain language, real examples from around Canberra — so you can stop worrying and focus on growing your business.
What Is Tax Residency and Why Should Arborists Care?
Tax residency simply means whether the ATO sees you as an Australian resident for tax purposes or a foreign resident. This choice isn’t just about your passport or whether you were born here. It affects things like:
What income gets taxed (just Australian assets and income or worldwide income)
Which tax rates apply (residents get the tax free threshold and lower rates)
Which deductions and tax offsets you are allowed
Access to things like the Medicare levy and superannuation concessions
For arborists in the ACT, most businesses are local, but there are plenty who travel, work seasonally, or have family or investments across borders. If that’s you, this section explains what you need to know.
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The Four Residency Tests: How the ATO Determines Residency Status
The ATO uses four main tests to determine residency status. If you meet anyone, you’re classed as an Australian resident for tax purposes:
The Resides Test (Primary Test)
Do you live in Australia “ordinarily”? The ATO checks where your home is, how long you stay, where your business and family are, and how you live day-to-day. The test applies to your usual place of residence and living arrangements.
The Domicile Test
Is your permanent home (by law) in Australia? If you grew up here and never truly moved away, or your permanent place of abode is here, you likely meet this test — unless you can prove your permanent home is somewhere else.
The 183-day Test
Did you spend more than 183 days in Australia in the income year (1 July–30 June)? If so, unless your true home is overseas and you don’t plan to stay, you’re considered a resident. This includes all days, even if you visit Australia temporarily or work in various locations.
Commonwealth Superannuation Test
This applies mainly to Australian government employees and Australian government employees working overseas in certain super schemes.
Key example: If you’re an arborist with contracts locally but spend a chunk of the year working in New Zealand, your actual status depends not just on days spent but also on your physical presence intention and where your home and business purpose family business ties lie.
Practical Impact: How Residency Affects Your Business Taxation
Your residency status changes what income is taxed, the rates you pay tax at, and what offsets and deductions your business can use.
Resident vs Non-Resident — The Core Differences
Being a resident or non-resident for tax purposes shapes your entitlements, obligations, and how much tax you pay.
| Resident (ATO) | Non-Resident (ATO) |
---|---|---|
What’s taxed | All worldwide income | Only Australian source income |
Tax free threshold | $18,200 | None |
Personal tax rates (2024–25) | 0%–45%, threshold applies | 30% above $0, higher rates above $135,000 |
Business income | All your arborist income, wherever earned | Only your Australian jobs |
2% on taxable income above $27,222 | None | |
Deductions | All eligible business deductions | Only Australian income-related deductions |
Every claim must be backed by receipts and clear records — this applies to all arborists, regardless of residency.
Key Residency Scenarios for Arborists
Let’s look at some common situations arborists experience and see how your residency status affects your tax.
Local ACT Arborists Staying Put
If you’re running your business in the ACT, living here year-round, and don’t plan to move, you’re almost certainly an Australian resident for tax. That means you get the full tax-free threshold, lower tax rates, the Medicare levy (if your taxable income is above thresholds), and can claim all normal business deductions.
Seasonal or Traveling Arborists
If you spend six months or more in Australia but work part of the year somewhere else, the ATO looks at where your home and business ties are — not just the calendar. If your home is in Canberra, and you come back after jobs elsewhere, you’re likely still a resident for tax purposes.
Arborists Expanding Overseas or Moving Permanently
If you set up a home and business overseas, change permanent addresses, and intend to stay there for good, you may no longer be a resident. If so, only your Australian income is taxed locally. You lose the tax-free threshold and some deductions and pay tax at higher rates on local jobs.
Working Holiday Makers in Tree Services
If you’re a working holiday maker on a temporary visa working in arboriculture, you get special tax rates: 15% on income up to $45,000, then 30% above that. You don’t get the tax-free threshold, but these rates are better than standard non-resident rates.
Foreign Arborists Working Temporarily in Australia
If you come for short contracts and your normal home is clearly overseas, you’ll usually be taxed as a foreign resident for tax purposes. Most business expenses linked to Australian work are still deductible. But you’ll start paying tax at 30% from the first dollar.
What Counts as “Home” and “Australian Source Income” for Arborists?
The ATO’s rules for arborists are clear but practical in day-to-day reality:
Your “home” is where your key personal ties are — not just a mailing address
If your main clients, staff and equipment are ACT-based, and you consider Canberra home, that’s what counts
income from jobs, contracts, or Australian assets is always taxed here, regardless of where you sleep at night
If you bill for tree removal jobs overseas, that income is only taxed here if you’re an Australian resident for tax
Maintaining a business HQ, owning property or employing staff in Australia strengthens your residency case
The ATO also looks at factors like where you maintain bank accounts, employment ties maintenance, and your social connections when making these decisions.
How Your Business Structure Changes the Rules
Arborist businesses can be sole traders, partnerships, companies or trusts. Residency for tax applies differently for each:
Sole Traders and Partnerships
Residency is about the owner/partner’s individual status. If you (the person) are a resident, all global income is taxed. If not, only local income counts.
Companies
A company is a resident if it’s registered/incorporated in Australia, if central management/control is here, or shareholders are residents. This means even if you move overseas, your company may stay resident (and taxed) here.
Trusts
Residency is based on whether your trustee is an Australian resident or if central management is in Australia.
Tip: If your business is changing size or you’re looking to restructure for asset protection, make sure you consider how this will affect residency and tax reporting.
Tax Implications: What You’ll Actually Pay
Knowing your residency status makes it easier to plan for income tax, Medicare levy, and business-related tax payments throughout the year.
For Australian Residents
Australian residents pay tax on their worldwide income using these rates for 2024-25:
$0 – $18,200: 0% (tax free threshold)
$18,201 – $45,000: 19%
$45,001 – $135,000: 32.5%
$135,001 – $190,000: 37%
$190,001+: 45%
Plus the Medicare levy at 2% if your taxable income is above $27,222. If you earn over $101,000 as a single person (or $202,000 as a couple) and don’t have private health cover, you’ll also pay the Medicare levy surcharge at 1% to 1.5%.
For Non-Residents
Foreign residents pay these rates on Australian source income:
$0 – $135,000: 30%
$135,001 – $190,000: 37%
$190,001+: 45%
No tax-free threshold, no Medicare levy, and some investments may have withholding tax applied.
For Working Holiday Makers
Special rates apply if you’re on a working holiday visa:
$0 – $45,000: 15%
$45,001 – $135,000: 30%
$135,001 – $190,000: 37%
$190,001+: 45%
Deductions Arborists Can Claim
No matter your tax residency, you need to declare your full Australian earnings and claim eligible business deductions. What you can claim as an arborist includes:
Protective clothing and safety gear used for work
Equipment and tools for tree services (chainsaws, grinders, ladders, etc.)
Permit, licence, and training costs strictly for your business
Business use of vehicles (see instant asset write-off rules for 2024–25)
Depreciation for business assets — claims must be based on business use portion
Costs of staff, insurance and compliance directly linked to business
Energy expenses, internet, and phone tied to business operations
You must keep detailed records for each deduction (receipts, logbooks, depreciation schedules). Claims for home office expenses need to follow specific ATO methods.
Note: Deductions related to jobs or assets outside Australia can generally only be claimed by tax residents, not foreign residents.
Common Pain Points Around Tax Residency for ACT Arborists
Many local tree service owners face these issues:
Unclear Residency Status: Especially if splitting time between Australia and abroad or moving for work — confusion can lead to costly tax mistakes when you file your tax return.
Missing Deductions: Failing to claim for protective gear, equipment, or instant asset write-off means leaving money on the table.
Seasonal Cash Flow Gaps: income fluctuates with seasonal demand, making it harder to set aside tax money or plan for retirement.
Asset Protection: If expanding or restructuring, you need to know whether your business will stay “Australian resident” for tax purposes.
Retirement and Superannuation: Only residents can fully access some super benefits and planning tools.
Steps to Stay Compliant and Improve Your Arborist Business
Staying on top of your residency status, recordkeeping, and tax planning helps keep your business compliant and profitable.
Step 1: Review Your Residency Regularly
If your business or living arrangements change, check your residency using the ATO’s official online tool or seek professional advice. Flag any uncertainty or major changes with your accountant.
Step 2: Keep Detailed, Up-to-Date Records
For every claim — from equipment purchases to vehicle use and home office hours — keep clear receipts and schedules.
Step 3: Use Available Tax Concessions
Take advantage of instant asset write-off and small business income tax offset, if eligible.
Step 4: Ensure Business Structure Matches Your Needs
Speak with a tax advisor before any major business restructure (sole trader to company, etc.), as this impacts your residency status and reporting requirements.
Step 5: Understand Your Tax Return Obligations
Whether you’re a resident for tax purposes or not, you need to lodge a tax return if you receive income from australian sources. Temporary residents and non-residents have different lodgment requirements.
Step 6: Plan for Tax Payments
Set aside money throughout the income year for tax. Residents need to consider income tax plus Medicare Levy. Non-residents should factor in higher tax rates and potential withholding tax on investments.
Special Considerations for Different Visa Types
Whether you’re a permanent resident, on a temporary visa, or an Australian citizen living overseas, your visa type affects your tax residency and obligations.
Permanent Residents
If you’re a permanent resident living in Australia, you’re almost always considered an Australian resident for tax purposes. You’ll pay tax on your worldwide income and get access to the tax free threshold.
Temporary Visa Holders
temporary residents (including some temporary visa holders) may qualify for certain tax exemptions on foreign income, but this depends on your specific visa and circumstances.
Australian Citizens Overseas
Even if you’re an Australian citizen, if you leave Australia permanently and establish your permanent home elsewhere, you may become a foreign resident for tax purposes. This affects how you pay tax on Australian investments and property.
What Happens When You Leave Australia or Return
Leaving Australia temporarily or permanently can change your tax residency, so it’s worth checking how your situation fits into ATO rules.
Leaving Australia temporarily: If you leave Australia temporarily for work or travel but maintain your home and business ties here, you’ll likely remain an Australian resident for tax purposes.
Leaving Australia permanently: If you migrate to another country with the intention to stay, you may become a foreign resident. This changes how your Australian investments are taxed and removes access to the tax-free threshold.
Returning to Australia: When you return to Australia after living overseas, you need to determine when you become an Australian resident for tax again. This affects which income year the changes apply from.
Conclusion: Bringing It All Together
Tax residency for arborists isn’t just a bureaucratic box to tick — it changes how much tax you pay, how you plan your cash flow, and how you set up for retirement or growth. Whether you’re a seasoned tree specialist or just starting your own business in the ACT, knowing your tax residency means you can stop worrying about compliance and get back to focusing on what you do best.
To keep your business strong, make tax residency something you check in on every year, especially before any big move or restructure. When in doubt, ask for help — there’s no shame in making sure your business is protected so you can spend less time stressing, and more time outdoors doing the job you love.
Talk to ACT Tax Group — we help arborists in the ACT and surrounds keep their business compliant, improve deductions, and plan for the future. Contact us today to get clear, actionable advice.
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