Edited version of private advice

Authorisation Number: 1051809539547

Date of advice: 1 March 2021

Ruling

Subject: Residency for tax purposes

Question

Are you a resident of Australia for tax purposes?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia and are a citizen of Australia.

You are not a citizen or permanent resident of any other country.

You have been employed by an Australian government related entity in Country X for over X years.

There is no double tax agreement between Australia and Country X.

You are employed on an ongoing basis and currently have no plans to cease your employment or return to Australia.

In Country X, you have a work permit and residency card that need to be renewed periodically.

You intend to apply for citizenship or a more long-term residency permit in the next 12 months.

You have not returned to Australia for one and a half years.

In Country X, you live in a privately leased furnished apartment.

In Country X, you have a bank account, a bicycle and are in the process of applying for a driver's licence.

You have a partner who lives in Country X.

In Country X, you have a wide circle of friends and are involved in various pursuits and activities.

You lodge tax returns and pay tax in Country X each year.

Since relocating to Country X, you have continued to lodge Australian income returns as a resident for tax purposes.

You do not own any real property in Australia or Country X.

Your parents live in Australia.

You have an Australian debit bank card.

You have no accommodation, household effects, vehicle, investments or credit card in Australia.

You use a relative's residential address as your Australian address for banking and voting purposes.

You have long-term friends in Australia and no sporting connections.

Your name is on the Australian electoral roll.

You do not have Australian private health insurance.

You have an Australian Higher Education Loan Program (HELP) debt.

You contribute to superannuation in Australia; however, you are not a member a member of the Commonwealth Superannuation Scheme (CSS) or the Public Superannuation Scheme (PSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

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

•         the resides test,

•         the domicile test,

•         the 183 day test, and

•         the superannuation test.

Only one of the tests needs to be met for an individual to be a resident of Australia for tax purposes.

The resides test

The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 5^th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

In your case, you:

•         have been living and working in a foreign country for over four years,

•         live in leased accommodation in that country,

•         do not have a place to live in Australia, and

•         have not returned to Australia since for one and a half years.

Therefore, you will not be taken to be residing in Australia during the current income year and will not be a resident of Australia under this test.

The domicile test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country (section 10 of the Domicile Act 1982). The intention needs to be demonstrated in a legal sense, for example, by way of becoming a permanent resident or a citizen of the other country.

In practice, if you are a resident who has always lived in Australia, you will retain a domicile here if you relocate to a foreign country, unless you choose to permanently migrate to that country.

In your case, it is considered that your domicile is still in Australia.

Permanent place of abode

A person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. 'Permanent' does not mean everlasting or forever but it is to be distinguished from temporary or transitory.

In FC of T v Applegate (79 ATC 4307; (1979) 9 ATR 899), Fisher J described 'permanent place of abode' as being:

.....the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place.

In your case, as mentioned above, you:

•         have been living and working in a foreign country for over four years,

•         live in leased accommodation in that country,

•         do not have a place to live in Australia, and

•         have not returned to Australia for one and a half years.

Consequently, the Commissioner is satisfied that you will have a permanent place of abode outside of Australia during the current income year and therefore, you will not be a resident of Australia under this test.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for 183 days or more in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here.

You will not be a resident under this test for the current income year as you will not be present in Australia for more than 183 days during the year.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.

You are not a resident under this test.

Conclusion

As you do not meet any of the residency tests, you are not a resident of Australia for taxation purposes.

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