Edited version of private advice

Authorisation Number: 1051822531583

Date of advice: 30 March 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes in the 20XX financial year?

Answer

Yes

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a duel citizen of Australian and Country A who lives in Country A but who spends approximately X to Y months in Australia every year. When you travel to Australia you do so to visit family and friends.

You left Australian many years ago to live and work in Country A. You met and married your spouse in Country A and your children were born and raised there.

You live in Country A with your spouse. You jointly occupy your home which you own. This home is not being sold or rented while you are in Australia.

You receive a pension from the Country A government which is approximately XXX in local currency per month. This pension is taxed, and you receive a net pension of approximately YYY in local currency per month.

You have other family who live in Australia including close relatives and grandchildren.

You travelled to Australia as normal and arrived in early 20XX and had a return ticket booked for mid-year. Your spouse travelled with you to Australia. However, the Covid pandemic travel restrictions prevented your return travel. You have remained in Australia since arrival as travel has become difficult.

You are in a high-risk category for Covid infection. As a result, you have taken a cautious approach to international travel until the current vaccine program in Country A and Australia allows you to resume normal travel movements.

You intend to return to Country A as soon as this becomes logistically possible. You do not have any plans to reside in Australia permanently. You retain strong family connections to Country A where you have your home and other family members.

You own an apartment in Australia and a minority interest in another property which you inherited. You are currently living in the apartment that you own in Australia.

Neither you nor your spouse has ever been employed by the Australian Commonwealth government and neither belongs to any Commonwealth superannuation scheme such as CSS or PSS.

Relevant legislative provisions:

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

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

The terms 'resident' and 'resident of Australia', regarding 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.

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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

Resides Test

When considering the resides test the following factors are normally considered:

•         physical presence

•         intention or purpose

•         family or business ties

•         maintenance and location of assets

•         social and living arrangements.

In your case, you are a citizen of Australia who departed Australia many years ago to live and work in Country A.

This subject is addressed in Taxation Ruling 98/17 (TR98/17) Income tax: residency status of individuals entering Australia. At paragraphs 20 and 21 it states -

20. All the facts and circumstances that describe an individual's

behaviour in Australia are relevant. In particular, the following factors

are useful in describing the quality and character of an individual's

behaviour:

•         intention or purpose of presence;

•         family and business/employment ties;

•         maintenance and location of assets; and

•         social and living arrangements.

21. No single factor is necessarily decisive and many are

interrelated. The weight given to each factor varies depending on

individual circumstances.

Your intention upon departure was to live and work in Country A on a permanent and indefinite basis.

However, you have maintained strong family ties with Australia and nurtured these ties with regular visits.

You have established what could be described as a permanent presence in Country A where you stay in a jointly owned home and have become a citizen of that nation.

However, during the income year, you have developed a strong connection with Australia as evidenced by -

•         Your Australian abode being available to you and you re-occupying it upon returning to Australia.

•         You previously visiting Australia for family reunions and checking on your investments until recently. However, with the unexpected Covid pandemic travel restrictions, you are electing to remain in Australia longer than anticipated for health reasons.

•         You being in Australia for X days in the 20XX year which is a considerable period of time.

•         You travelling to Australia with your spouse.

•         You having delayed your return to Country A.

Your pattern of travel demonstrates that while you were living in Country A previously, you are now staying in Australia and have changed your pattern of travel because of the pandemic. You cannot be considered to be merely visiting Australia. You have now developed a strong presence here which is indicative of a person residing here.

You are a resident for tax purposes under the resides test in the 20XX financial year.

The domicile test

Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

Domicile

"Domicile" is a legal concept to be determined according to the Domicile Act 1982 and common law rules. A person's domicile is in their country of origin unless they acquire a different domicile of choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice.

In your case, you are a citizen of Australia. You have left Australia and have chosen to live in Country A. You are also a citizen of Country A.

You have abandoned your domicile in Australia and acquired a domicile of choice in Country A as you have Country A citizenship. You have not re-established your Australian domicile.

You are not a resident for tax purposes under this test.

The 183 days test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

You have been in Australia for 158 or more days in this financial year.

You are not a resident for tax purposes under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Sector 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 contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person.

You are not a resident for tax purposes under this test.

Residency status

As you satisfy one of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a resident of Australia for income tax purposes in the 20XX financial year.

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