Local co-ordinates, used to produce maps and measurements, and global ones differ by more than 1m.
The body responsible for the change said it would help the development of self-driving cars, which need accurate location data to navigate.
Australia moves about 7cm north annually because of tectonic movements.
Modern satellite systems provide location data based on global lines of longitude and latitude, which do not move even if the continents on Earth shift.
However, many countries produce maps and measurements with the lines of longitude and latitude fixed to their local continent.
"If the lines are fixed, you can put a mark in the ground, measure its co-ordinate, and it will be the same co-ordinate in 20 years," explained Dan Jaksa of Geoscience Australia. "It's the classical way of doing it."
Because of the movement of the Earth's tectonic plates, these local co-ordinates drift apart from the Earth's global co-ordinates over time.
"If you want to start using driverless cars, accurate map information is fundamental," said Mr Jaksa.
"We have tractors in Australia starting to go around farms without a driver, and if the information about the farm doesn't line up with the co-ordinates coming out of the navigation system there will be problems."
The Geocentric Datum of Australia, the country's local co-ordinate system, was last updated in 1994. Since then, Australia has moved about 1.5 metres north.
So on 1 January 2017, the country's local co-ordinates will also be shifted further north - by 1.8m.
The over-correction means Australia's local co-ordinates and the Earth's global co-ordinates will align in 2020.
At that point a new system, which can take changes over time into account, will be implemented.
"We used the old plate fixed system to make life simple, but we don't want to do this adjustment every so often," said Mr Jaksa.
"Once we have a system that can deal with changes over time, then everybody in the world could be on that same system."

The GMB claim half of the staff working at the Glensanda Quarry, north of Oban, face the sack from a new contractor.
The union fears Spanish-owned Oban Earth Works will cut 50% of staff when it takes over excavation and haulage operations at the quarry.
That work had been carried out by the Hargreaves company on behalf of Aggregate Industries.
A spokeswoman for Hargreaves said their contract ended in May, but they would remain during a handover period until the end of July.
They say staff have been transferred across to the new company.
A spokesman for Aggregate Industries said: "As with any commercial operation, it's important for Aggregate Industries to review and renew our partnerships, to ensure we can offer the best service available.
"We are switching load and haul provider at our plant in Glensanda, and as part of that process there are individuals who will be transferred from our current provider Hargreaves, to our new one (FERPI). Unfortunately, due to increasing production efficiencies on site, there are some employees at risk of being made redundant by FERPI.
"We understand and appreciate that this is a potentially difficult time for those individuals affected and have been in close contact with FERPI to ensure employees are offered all the support they need throughout the consultation process."
The BBC has been unable to speak to anyone from Oban Earth or Aggregate Industries.
Australia is to shift its longitude and latitude to address a gap between local co-ordinates and those from global navigation satellite systems (GNSS).
[NEXT_CONCEPT]
Up to 25 jobs are under threat at Europe's biggest granite quarry in Argyll, according to union leaders.