Edited version of private advice

Authorisation Number: 1052090329089

Date of advice: 28 February 2023

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 ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are a citizen of both Australia and Country Y.

Your spouse was born in Australia.

Your spouse is a citizen of both Australia and Country Y.

You and your spouse both hold Australian and Country Y passports.

You have adult children who live in Country Y.

Your spouse is retired.

You and your spouse have elderly parents living in Australia.

You and your spouse have siblings living in Australia and elsewhere around the world.

You and your spouse broke Australian tax residency when you departed Australia in XXXX and have been filing as tax non-residents of Australia since then.

Similarly, when you and your spouse were in Country Y between XXXX and XXXX, you also broke Australian tax residency and filed as tax non-residents of Australia and tax residents of Country Y.

Following your retirement, you have recently taken on some Australian directorships which will require you to be in Australia to attend board and other meetings related to your appointments.

You estimate that based on the board positions and the location of your and your spouse's parents (who are requiring more assistance in their elderly age), that you will spend approximately 40-45% of your time in Australia from 1 July 20XX and the remainder in Country Y (excluding holidays/workdays spent in third country locations).

Your spouse expects to accompany you to Australia on some of your work trips but overall expects to spend approximately 70% of their time in Country Y and 30% in Australia.

You and your spouse reside in your residence in Country Y which you purchased in XXXX.

You and your spouse's living arrangements will not change as a result of the increased travel to Australia.

All your furniture and fittings continue to be maintained in Country Y and you reside in your Country Y residence when you are in Country Y.

When in Australia, you stay at your parent's home in City B and/or hotels depending on board meeting locations.

You and your spouse are currently considered Country Y domestic tax residents and have been since you moved there in XXXX.

You and your spouse will likely continue to be considered domestic tax residents of Country Y despite the change in your living and working arrangements.

You own with your spouse jointly several residential properties in Country Y:

Your furniture and fittings and personal belongings are all located in Country Y in your Country Y home. When travelling to Australia, you bring a suitcase each time. Depending on the length of the trip this may be carry on or checked in luggage.

You may purchase or rent a property in City Z to use as your Australian base in the future as you expect to spend most of your work-related trips in City Z.

You have a Country Y self-invested personal pension (worth approximately XXXXX).

You have an Australian superannuation fund with a balance of approximately AUD$XXX.

You have wills in both Country Y and Australia with executors based in the respective countries.

A requirement of each of your board positions is that you have shares in the respective companies of which you are a Board member.

As such you have started acquiring shares in each of these companies and over the next few years expects to acquire more shares in each of these companies.

You have a family trust. Your spouse is the trustee. You are the specified beneficiary; however, the provisions include your parent, children and sibling.

The trust's only asset is 50% of a property. The other 50% is owned by your parent. The property is held as tenants in common with your parent who resides in the property as their main residence.

You have lodged tax returns for the trust which have been prepared by your tax advisors.

The trust has no sources of income.

You and your spouse hold Country Y health insurance as well as Country Y property and personal contents insurance. They do not hold any such insurances in Australia.

Your remuneration from one of your directorships is paid into your Australian bank account, however, the other is paid into your Country Y bank account.

You and your spouse have never been Commonwealth Government employees and neither of you are eligible to contribute to the PSS or the CSS super funds.

Assumption

Your future travel and time spent in Australia will be in line with your current intentions.

Relevant legislative provisions

Income Tax Assessment Act 1936 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 TR 2022/D2 Income tax: residency tests for individuals.

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 income years ending 30 June XXX, 30 June XXX and 30 June XXXX 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 are a citizen of both Australia and Country Y

•         You live in country Y in a home owned by you and your spouse

•         You intend on being in Australia for 40-45% of your time

•         Your day- to- day life is in Country Y

•         Your spouse will accompany you to Australia on some of your trips

•         While in Australia you will stay with your parent and also at other locations for short periods to attend meetings.

You will not be in Australia for more than 183 days in any income year.

You do not fulfil the requirements of the Commonwealth Superannuation test and are therefore not a resident under this test.

You are not a resident of Australia for taxation purposes.

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