Edited version of private advice

Authorisation Number: 1052028967717

Date of advice: 20 September 2022

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 ended 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Country Z.

You are a citizen of Country Z.

You are a permanent resident of Australia.

You returned to Country Z several years ago to start a business.

You intend to expand this business into other countries.

Your employment contract with the business has been extended for the next few years.

You are still living and working in Country Z.

Your family have remained in Australia living in the family home.

You visit your family in Australia for short periods and you are not in Australia for more than 183 days in any financial year.

Your family visit you in Country Z.

Your family went to Country Z for a short visit a couple of years ago and intend on visiting you in the next few months.

You do not financially support your family in Australia.

You live in a 2 bedroom apartment in Country Z which is for your sole use.

This apartment is owned by your parents.

You took all of your work equipment along with clothes and personal items to Country Z with you when you left Australia.

You have no intention to return to Australia in the next few years.

You are the former director of an Australia-based company.

You have resigned from the position, leaving your spouse, who is also a director of the same Australian company, to manage the operation of the business.

You maintain a bank account in Country Z.

Neither you nor your spouse are eligible to contribute to the PSS or the CSS super funds.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6(1)

Reasons for decision

For tax purposes, whether you are a resident of Australia is defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

The definition has four tests to determine your residency for income tax purposes. These tests are:

•         the resides test

•         the domicile test

•         the 183 day test, and

•         the Commonwealth superannuation fund test. It is sufficient for you to be a resident under one of these tests to be a resident for tax purposes.

Our interpretation of the law in respect of residency is set out in:

Taxation Ruling IT 2650 Income tax: residency - permanent place of abode

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

The resides test

The resides test is the primary test of tax residency for an individual. If you reside in Australia according to the ordinary meaning of the word resides, you are considered an Australian resident for tax purposes.

Some of the factors that can be used to determine whether you reside in Australia include:

•         period of physical presence in Australia

•         intention or purpose of presence

•         behaviour while in Australia

•         family and business/employment ties

•         maintenance and location of assets

•         social and living arrangements.

No single factor is decisive, and the weight given to each factor depends on your specific circumstances. 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

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

Whether your domicile is Australia is determined by the Domicile Act 1982 and the common law rules on domicile. For example, you may have a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

Whether your permanent place of abode is outside Australia is a question of fact to be determined in light of all the facts and circumstances of each case.

Key considerations in determining whether you have your permanent place of abode outside Australia are:

•         whether you have definitely abandoned, in a permanent way, living in Australia

•         length of overseas stay

•         nature of accommodation, and

•         durability of association

The 183-day test

Under the 183 day test, if you are present in Australia for 183 days or more during the income year, you will be a resident, unless the Commissioner is satisfied that both:

•         your usual place of abode is outside Australia, and

•         you do not intend to take up residence in Australia.

The question of usual place of abode is a question of fact and generally means the abode customarily or commonly used by you when are physically in a country.

The Commonwealth 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 circumstances

We have considered each of the statutory tests listed above in relation to your particular facts and circumstances. We conclude that, for the relevant period you are not a resident of Australia as follows.

Taking into account your individual circumstances, we have concluded that you are not a resident of Australia according to ordinary concepts.

We also consider that your domicile is not in Australia and the Commissioner is satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

•         You have been living and working in Country Z.

•         You intend on being in Country Z living and working for the next few years.

•         You will only visit Australia for short periods to see your family and will not exceed 183 days in any financial year.

•         Your family intend on visiting you in Country Z.

•         You live in accommodation in Country Z owned by your parents.

•         You do not financially support your family in Australia.

Application to your circumstances

We have considered each of the statutory tests listed above in relation to your particular facts and circumstances. We conclude that, for the relevant period you are not a resident of Australia for taxation purposes.

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