Edited version of private advice

Authorisation Number: 1051820719812

Date of advice: 31 March 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia from late 20XX?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are an Australian citizen.

In early 20XX you signed an employment contract, starting in late 20XX.

In late 20XX you left Australia with the intention of working in Country Z for several years.

You arrived in Country Z and stayed in Country Z under a visa which is valid for several years.

Your Australian assets include a bank account, superannuation, shares and rental property.

You suspended your private health insurance.

You set up bank accounts and phone service in Country Z.

You signed a contract for a rental apartment in Country Z.

You make regular money transfers to a mortgage account in Australia.

You returned to Australia on early 20XY to visit friends and family.

You began working remotely for your overseas employer while in Australia and due to various restrictions that applied to international travel, you applied for an extended remote working arrangement, which was approved.

You continued to maintain the apartment in Country Z.

You moved into your parent's home in mid 20XY.

The ban that prevented you from re-entering Country Z was lifted on early 20XY.

You finished working in Australia on late 20XY.

You left Australia on early 20YY.

You do not intend to return to Australia during the 20YY financial year

You intend to continue to live in Country Z for another few years at minimum.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1)

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 Country Z,

•         moved to Country Z with the intention of living there for the next few years,

•         live in leased accommodation in that country,

•         did not purchase any assets while in Australia,

•         were only living with family and friends on an informal basis, and

•         maintained your employment in Country Z through an extended remote working arrangement.

Therefore, you will not be taken to be residing in Australia during the 20XY, and 20YY 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, you:

•         have been living and working in Country Z,

•         moved to Country Z with the intention of living there for the next few years,

•         live in leased accommodation in that country, and

•         did not intend to return to Australia during the initial three years period, other than visit family and friends. However you ended up in Australia for a long period of time due to the Covid-19 pandemic lockdowns which prevented international travel.

•         have now returned to Country Z and are not intending on returning to Australia during the rest of the income year.

Consequently, the Commissioner is satisfied that you will have a permanent place of abode outside of Australia during the 20XY, and 20YY income years and therefore, you will not be a resident of Australia under this test.

The 183 days 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 were not in physically present in Australia for 183 days or more during the 20XY financial year. Therefore you are not a resident of Australia under this test in the 20XY financial year.

You will not be a resident under this test for 20YY income year as the Commissioner is satisfied that your usual place of abode is outside of Australia because you:

•         have been living and working in Country Z,

•         moved to Country Z with the intention of living there for the next few years,

•         have signed a contract for leased accommodation for an extended period,

•         maintained the leased accommodation while visiting Australia.

You abode is Country Z is more settled than your living arrangements during your time in Australia.

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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