Edited version of private advice

Authorisation Number: 1052122081516

Date of advice: 26 May 2023

Ruling

Subject: Resident of Australia for taxation purposes

Question

Were you a resident of Australia for taxation purposes on and after Date 1?

Answer

No.

This ruling applies for the following periods:

Income year ended 30 June 20XX

Income year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

You travelled overseas to several countries for holiday purposes and spent around one month in one country to conduct some research as part of your studies being completed in Australia.

You were employed by Organisation X when you began making initial enquiries about postdoctoral positions with Company ABC.

You received an employment offer from Company ABC, which you accepted, entering into a full-time fixed term work contract under which you would be located in Country X for a specified number of years. At the end of the contract you may be offered another contract with Company ABC.

You left Australia on Date 1to travel to Country X on an Australian passport, arriving the following day.

You applied for and were granted a permit which allowed you to live and work in Country X for the length of your work contract with Company ABC, which is valid for the period of your employment. This permit can be extended if you are offered another work contract with Company ABC.

After your arrival in Country X, you stayed in accommodation provided by Company ABC for some weeks before you entered into a standard continuing lease for a property for an indefinite period of time.

Your partner, Person A, joined you in Country X some months after your arrival.

You and Person A anticipate staying in Country X for the period of your employment, but do not intend to move to there on a permanent basis and expect to return to live in Australia in the future.

You have the following in Country X:

•         A Bank account

•         Furniture shipped from Australia and furniture purchased in Country X

•         Personal items, such as computer, paintings and jewellery you took to Country X with you

•         health insurance which covers all basic health needs, such as general practitioner, dentist, hospital, which are paid directly from your wage.

You are taxed as a resident in Country X.

You do not intend purchasing a property in Country X at this point.

You have transferred your Australian car license to Country X as you could not use your Australian license in Country X after you had lived there for a specified period. You do not own a car in Country X.

You undertook language classes for several months to learn the national language of Country X.

Prior to leaving for Country X, you resided at a property (the Property) that you had jointly purchased with

Person A where you have lived for some years until you departed for Country X.

You have the following in Australia:

•         Person A had continued to reside at the Property after you departed for Country X, which was rented out around the time they departed for Country X on a standard one-year lease with an option to renew for an additional one-year period, or to change to ongoing monthly agreements. Your parent is managing the Property on your behalf, and it will not be available to you when you visit Australia. You and Person A continue to be responsible for the mortgage on the Property. You have not used the address of the Property on any new documents since moving to Country X.

•         Jointly held private health insurance with Person A.

•         You and Person A sold your cars and unwanted furniture prior to moving to Country X with

some furniture and other items being kept in storage while you are in Country X.

•         Australian shares.

•         Australian bank accounts.

You have changed your postal address on your individual Australian mail and mail relating to your and Person A's joint assets to your parent's address, with a one year re-direction to capture other mail for which you had not changed your postal address.

You have let your Australian membership for a society associated with your profession lapse and have not acquired any in Country X at this point.

You remain in contact with family and friends but were not part of any social and/or sporting clubs in Australia prior to moving to Country X.

You do not have any position or employment being held for you in Australia while you are in Country X.

You contacted the Australian Electoral Office to advise them that you were overseas, but that you wished to remain on the electoral role.

You have not advised any Australian financial institutions with whom you have investments, or any Australian companies in which you hold investments, that you are a foreign resident.

Neither you nor Person A hold a position with the Commonwealth Government of Australia or are eligible to contribute to the superannuation fund.

You have not travelled back to Australia since your arrival in Country X.

Your and Person A's future plans involve visiting Australia at Christmas time. You also plan to hold your wedding in Australia in the following month. You will not spend significant periods of time in Australia during income years after the ruling period other than occasional holidays to visit family.

Relevant legislative provisions

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

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Overview of the law

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 Draft 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 period on and from Date 1, you were 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 in Australia. However, the Commissioner is satisfied that your permanent place of abode is outside Australia, in Country X. We considered the following factors in forming our conclusion:

•         You departed Australia on Date 1 and relocated to Country X with the intention of staying there to undertake your employment for a specified number of years, which may be extended.

•         You obtained the necessary permit to allow you to stay and work in Country X during the period of your employment, which may be extended.

•         Your partner has travelled to join you in Country X and has obtained employment in Country X.

•         You stayed in temporary accommodation after your arrival in Country X before leasing a property for an indefinite period of time.

•         Your Australian property is being rented and is not available to you during the leased period/s.

•         You have a bank account, furniture and personal items, a car license and private health insurance in Country X. You have also attended language classes to learn the national language of Country X.

•         You have not travelled to Australia since you arrived in Country X and will not travel to Australia prior to the end of the ruling period.

You were not in Australia for 183 days or more during the first income year in the ruling period and will not be in Australia for 183 days during the second income year in the ruling period.

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

Therefore, you are not viewed as being a resident of Australia on and from Date 1 until the end of the ruling period.

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