Edited version of private advice

Authorisation Number: 1051783918540

Date of advice: 3 December 2020

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

! July 20XX

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

You have an ex-spouse and dependents that live in Australia.

You left Australia to live and work in country X.

You had been a non-resident of Australia for taxation purposes for more than XX years and had been a long-term resident of country X together with your country X partner.

You accepted a temporary job in Australia in the 20XX financial year with employer A in 20XX.

You accepted the job with the knowledge that it would be last approximately 9-10 months.

You ceased employment with employer A and departed Australia in 20yy for country Y.

You accepted a job with employer B in country Y with the intention of remaining in country Y.

You obtained a work permit and a long-term visa in country Y.

Whist in country Y, you leased an apartment, obtained a mobile phone number, home internet and TV, set up bank accounts.

Your partner visited you in country Y periodically under a tourist Visa.

The Project was deferred. You ceased employment with employer B.

You departed country Y for country X with your partner in 20yy.

You accepted a job with employer C in country X.

You obtained a long-term visa and a registration card in country X.

Whist in country X, you leased an apartment, purchased a new car, opened bank accounts.

You have obtained a driver's licence and a country X Yacht Operators Licence.

You are a member of a club in country X.

Prior to departing Australia, you sold your apartment in Australia. The apartment was purchased for your personal use during the temporary job placement in Australia.

You also sold your car and personal affects prior to departing Australia.

Your country X partner visited you in Australia periodically under a tourist visa.

You have cancelled your Australian private health insurance policy.

You have no social or sporting ties in Australia.

You do not have any assets in Australia.

You do not intend or plan to return to Australia as you intend to stay in country X with your partner who you intend to marry.

You and your spouse are not eligible members of a Commonwealth superannuation scheme.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms 'resident' and 'resident of Australia', regarding an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:

•         the resides test,

•         the domicile (and permanent place of abode) test,

•         the 183 day test, and

•         the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides (ordinary concepts) test

The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word 'resides' should be given the widest meaning and there have been several factors identified which can assist in determining if a taxpayer is a resident of Australia under this test.

Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test:

(i)    physical presence in Australia

(ii)      nationality

(iii)     history of residence and movements

(iv)     habits and "mode of life"

(v)      frequency, regularity and duration of visits to Australia

(vi)     purpose of visits to or absences from Australia

(vii)   family and business ties to different countries

(viii)  maintenance of place of abode

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

It is important to note that not one single factor is decisive, and the weight given to each factor depends on individual circumstances.

In your case, you had been a non-resident of Australia for taxation purposes for more than 10 years and had been a long-term resident of country X together with your country X partner who you intend to marry.

You accepted a temporary job in Australia in the 20xx financial year with the knowledge that it would be last approximately 9-10 months.

While working in Australia, you purchased an apartment for your exclusive use, your country X partner visited you in Australia periodically under a tourist visa.

Prior to departing Australia, you sold your apartment in Australia, you also sold your car and personal affects prior to departing Australia.

You accepted a job in country Y with the intention to live and work there. However, the Project was deferred.

You departed county Y for county X with your partner and now live and work in county X.

You are not a resident of Australia for taxation purposes under this test.

The domicile (and permanent place of abode) test

Under this test, a person whose domicile is Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied that they have a permanent place of abode outside of Australia.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

In your case, your domicile of origin is Australia and there is no evidence to suggest that you have established a new domicile in country X. Therefore, your domicile is Australia.

The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives.

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.

In your case, you were based in country X with your partner. You do not have a permanent home available to you in Australia.

The Commissioner is satisfied that you set up a permanent place of abode outside Australia.

You are not a resident of Australia for taxation purposes under this test.

The 183-day test

Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

In your case, you were in Australia for more than 183 days in 20yy income year for work purposes, it is accepted that you were a resident for taxation purposes for that period. However, you do not intend or plan to return to Australia as you intend to stay in country X with your partner who you intend to marry.

You are not a resident of Australia for taxation purposes under this test as you will not be in Australia for 183 days after your departure.

Superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees.

Based on the information you have provided; you are not a resident of Australia for taxation purposes under this test

Conclusion

You are not a resident of Australia for taxation purposes from the date you departed Australia.

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