ATO Data Matching: Increased Scrutiny Of Tax Residency Positions
Residency status can materially affect an individual’s Australian tax position, including how income, capital gains, the tax-free threshold and Medicare levy obligations are treated.
On 24 August 2026 the ATO announced that it is increasing its focus on tax residency through its passenger movements data-matching program. Under the program, the ATO will obtain selected travel and immigration information from the Department of Home Affairs for the 2026-27 to 2028-29 financial years.
The ATO may use this data to compare a taxpayer’s reported residency position with their actual travel history, visa status and immigration records. This means unsupported or inconsistent residency positions are more likely to be identified and queried.
The data may include names, dates of birth, arrival and departure dates, passport details, visa status, residency status, lawful presence and citizenship information. The ATO estimates that records for approximately 115,000 individuals will be obtained each financial year.
The data matching program is particularly relevant for individuals with cross-border arrangements, including those who spend extended periods overseas, return to Australia after living abroad, work remotely across borders, or maintain homes, family or business connections in more than one country. These arrangements increase review risk where travel records, visa status or Australian connections are inconsistent with the residency position disclosed in tax returns. For Australian tax residents, the program may also highlight whether foreign income has been included in Australian tax returns, as residents are generally taxable on worldwide income. For non-residents, frequent or extended visits to Australia may expose unreported Australian-sourced income, taxable Australian property gains, or PAYG withholding obligations, particularly where travel records indicate work, business activity or asset dealings in Australia.
The program may also have implications for companies, trusts and other non-individual entities. The residency of directors and key decision-makers can be relevant to whether central management and control is exercised in Australia, and therefore whether an entity is treated as an Australian tax resident. Passenger movement records may make it easier for the ATO to identify where directors were physically located when important decisions were made, particularly where board meetings, approvals or strategic decisions are said to occur offshore, but travel records show a continuing Australian presence. This may increase review risk for entities that rely on offshore management arrangements, overseas boards or non-resident status.
Clients with cross-border business or investment arrangements should review their residency position before lodging tax returns or making significant tax decisions. This includes checking travel history, visa status, living arrangements, family and employment connections, overseas ties, and how residency has been disclosed in Australian tax documents.
Tax residency should not be assumed based only on citizenship, visa status, time spent in Australia or where income is earned. It requires a broader assessment of the person’s living arrangements, family and economic connections, intention, travel pattern, and ties to Australia and overseas.
Where the position is uncertain, clients should obtain advice and retain contemporaneous evidence to support the position adopted.
If you are unsure whether your client’s residency position is properly supportable, please contact Mimi Ngo to discuss how we can help assess your client’s status, identify risk areas, review supporting evidence and prepare a clearer position before any ATO review.