Edited version of private advice

Authorisation Number: 1052012863900

Date of advice: 2 August 2022

Ruling

Subject: Residency

Question

Were you a resident of Australia for the purposes of section 6(1) of the Income Tax Assessment Act 1936 for the 20XX income year?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Background

You were born in Australia and lived in Australia until you moved overseas.

Your spouse and child moved overseas with you.

You ceased to be a resident of Australia for income tax purposes in September 20XX.

You moved overseas on a Tier 1 Investor Partner Visa.

You were accompanied by your spouse and child on a Tier 1 Investor and Tier 1 Investor Child visa.

The visas were originally valid until January 20XX; however, the visas were renewed until 20XX when all members of the family were granted indefinite leave to remain overseas.

You, your spouse, and child have lived in an apartment which you purchased overseas.

You continue to live in this apartment and no intention of moving from it while you and the family are living overseas.

You intend to remain overseas for the foreseeable future while you pursue business opportunities in the region.

Australian assets and associations

You had been a company secretary and public officer of one entity in Australia. You resigned from this position upon your move overseas, replaced by an individual who ordinarily resides in Australia.

Where you had been the sole director of a private company, you advised a minimum of two (additional) Australian resident directors were appointed ensuring compliance with the Corporations Act 2001.

You and your spouse had maintained a Self-managed Superannuation Fund; however, you stated that due to the move, the fund's assets were transferred to an APRA regulated fund and the account is now closed

The former family home in Australia which you own, remains in 'caretaker mode'.

You undertook an extensive number of actions to end your associations with Australia, including:

a.    writing to Australian professional service providers to inform them that you were moving overseas.

b.    removing your details from the electoral roll.

c.     you cancelled your Medicare registration and your medical insurance upon departure.

d.    you advised your GP and medical specialists to remove you as a patient.

e.    you advised Australia Post that all mail addressed to your Australian residence be redirected to a post office box which is emptied twice a week by professional services firm and any Important Mail is shipped to you overseas; unimportant mail is marked 'Move Overseas' and returned to sender.

f.      you advised the service providers to liaise with a professional services firm.

You informed your child's school that the family was moving overseas..

Overseas assets and associations

Your spouse invested a certain amount of money to confirm your visa requirements. Your spouse appointed an overseas broker to manage the investment visa portfolio.

Your spouse works as a consultant to corporations based overseas and has made significant investments in overseas corporations through a mixture of loans and equity holdings.

You have completed the following:

a.    opened bank accounts.

b.    obtained credit cards.

c.     obtained Debit cards.

d.    registered as a voter.

e.    applied for and received confirmation of your entry into the overseas taxation system.

f.      appointed a tax agent and lodge overseas tax returns.

g.    you have engaged with a lawyer overseas.

h.    took out private health insurance for yourself and your family however that health insurance has since been cancelled.

i.      you and the family became patients at a dentist.

j.      you registered with and have used the services of a doctor.

k.     attended a gym.

Your child attended school overseas, and she has subsequently completed her schooling.

Travel to Australia

After departing Australia, you did not come to Australia in the remainder of the financial year ending 30 June 20XX.

For the year ended 30 June 20XX, you had short visits to Australia twice for business, personal and family reasons. For the year ended 30 June 20XX, you visited Australia four times also for personal and family reasons.

You advised in subsequent financial years, that you visited Australia three to five times per year with varying durations.

For the financial year ended 30 June 20XX, you advised you visited Australia twice staying a combined total of 105 nights. You advised the most recent visit was extended due to your mother's serious illness and subsequent passing away in July 20XX. You also advised that the COVID 19 pandemic also continued to limit travel.

During the visits you stated that you are often accompanied by your spouse and child. You advised that occasionally you visit the former family home to check on its condition and has on occasion stayed there.

You advised you usually stay at your sister in law's house or in a hotel. The most recent trip required 14 days in quarantine in a hotel.

You may in future continue to make trips to Australia to see your extended family.

It is also noted that you have arranged for the Australian family members to visit you overseas.

Relevant legislative provisions

Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 defines an Australian resident for tax 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', as applied to an individual, are defined in subsection 6(1) of the ITAA 1936.

The definition offers four tests to ascertain whether each individual 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 Commonwealth superannuation fund test.

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

Where an individual does not reside in Australia according to ordinary concepts, they will still be an Australian resident if they meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test).

The resides test

The ordinary meaning of the word 'reside' has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235... [W]here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:

• Physical presence
• Intention or purpose of presence
• Family and business/employment ties
• Maintenance and location of assets, and
• Social and living arrangements.

It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

Because the ordinary concepts test is whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia: Logan J in Pike v Commissioner of Taxation [2019] FCA 2185 at 57 reminds us that 'it is no part of the ordinary meaning of reside in the 1936 Act that there be a "principal" or even "usual" place of residence. ... It is important that ... "resident" not be construed and applied as if there were such adjectival qualifications.' For this reason, the test is not about dominance or exclusivity.

Application to your circumstance

We consider that your circumstances are not consistent with residing in Australia.

This is because:

•         you maintain a family home with your spouse and child overseas.

•         upon your departure from Australia, you notified the relevant Australian based authorities that you were leaving the country and similarly contacted the relevant overseas based authorities upon your arrival.

•         you have no intention in returning to Australia permanently however may continue to make trips to see extended family.

•         you have sourced and gained permanent residence overseas.

•         your physical presence in Australia for the 20XX income year was only for a total of 105 nights and the conduct of your visit was not consistent with residing in Australia.

Therefore, you are not a resident of Australia under the resides test.

The Domicile test

Under the domicile test, you are a resident of Australia if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Domicile

Whether your domicile is in Australia is determined by the Domicile Act 1982 and the common law rules on domicile.

Your domicile is your domicile of origin (usually the domicile of your father at the time of your birth) unless you have a domicile of dependence or have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and hold the positive intention to make that country you home indefinitely. Your domicile continues until you acquire a different domicile. Whether your domicile has changed depends on an objective consideration of all relevant facts.

Application to your circumstance

You were born in Australia and continuously resided here until your departure. You, your spouse, and child departed Australia for overseas in 20XX.

You moved overseas on a visa and the visa was used until yourself, your spouse and child gained indefinite leave to remain overseas. You intended to remain overseas indefinitely.

Therefore, it is considered your domicile of choice is overseas, and you are not a resident of Australia under this test.

Permanent place of abode

If you have an Australian domicile, you are an Australian resident unless the Commissioner is satisfied that your permanent place of abode is outside Australia. This is a question of fact to be determined based on all the facts and circumstances of each case.

'Permanent' does not mean everlasting or forever, but it is to be distinguished from temporary or transitory.

The courts have held that the phrase 'permanent place of abode' calls for a consideration of the town or country where a person is located. It does not extend to more than one country, or a region of the world.

The Full Federal Court in Harding v Commissioner of Taxation [2019] FCA 29 held at paragraphs 36 and 40 that key considerations in determining whether a taxpayer has their permanent place of abode outside Australia are:

•         whether the taxpayer has definitely abandoned, in a permanent way, living in Australia.

•         whether the taxpayer is living in a town, city, region, or country in a permanent way.

The Commissioner considers the following factors relevant to whether a taxpayer's permanent place of abode is outside Australia:

(a)   the intended and actual length of the taxpayer's stay in the overseas country;

(b)   whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c)   whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

(d)   whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

(e)   the duration and continuity of the taxpayer's presence in the overseas country; and

(f)    the durability of association that the person has with a particular place in Australia, i.e. maintaining assets in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

As with the factors under the resides test, no one single factor is decisive, and the weight given to each factor depends on the individual circumstances.

Application to your circumstances

The Commissioner is satisfied that your permanent place of abode is outside Australia. This takes into account that:

•         you purchased an apartment overseas in which you and the family have resided since your arrival overseas in 20XX.

•         you intended to live permanently overseas and your child went to school there.

•         you have no definite plans to return to Australia permanently or relocate to any other country.

•         you have no intention to return and reside in your family home in Australia despite the property remains in 'caretaker mode'.

•         you advised all relevant government, medical places and school for your child of your permanent departure of Australia.

Therefore, you are not a resident of Australia under this test.

183-day test

Where a person is present in Australia for 183 days or more during an income the person will be a resident for the income year, unless the Commissioner is satisfied that both:

•         the person's usual place of abode is outside Australia, and

•         the person does not intend to take up residence in Australia.

Application to your circumstance

During the 20XX income year you advised the most recent visit was extended due to your mother's serious illness and subsequent passing away in July 20XX. You also advised that the COVID 19 pandemic also continued to limit travel.

You have not been present in Australia for 183 days or more during the 20XX income year. Therefore, you are not a resident under this test

Superannuation test

An individual is a resident of Australia if they are either a member of the superannuation scheme established by deed under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, or they are the spouse, or the child under 16, of such a person.

Application to your circumstance

You are not a contributing member of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) or a spouse of such a person, or a child under 16 of such a person.

Therefore, you are not a resident under this test.

Conclusion

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the year ended 30 June 20XX.

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