Edited version of private advice

Authorisation Number: 1052122115471

Date of advice: 25 May 2023

Ruling

Subject: Resident of Australia for taxation purposes

Question

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

Answer

No.

This ruling applies for the following period:

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 have dual citizenships with Australia and Country B by birth due to your parent being a citizen of that country.

You made the decision to travel to Country X when your partner, Person A, accepted an employment position for some years in Country X.

While you were employed by Company XYZ in Australia you accepted an offer of full-time employment with Company ABC located in Country X.

You left Australia on Date 1to travel to Country X, with your employment with Company ABC commencing in some weeks later.

Prior to departing for Country X, you had for holiday purposes in several years with no overseas travel since then.

Your employment with Company ABC will primarily be performed in Country X, but you may travel to the company's other sites located in other countries as required.

You hold a work permit linked to your employment contract to enable you to live and work in Country X, which can be extended.

You do not plan on applying for permanent residency or citizenship in Country X.

Person A leased a property in Country X prior to your arrival, which is where you stay, and you are registered as a resident in the property.

You have the following in Country X:

•         A bank account

•         Furniture shipped from Australia and furniture purchased in Country X

•         Personal items, such as bicycles, guitars, personal computer and laptop, television, various electronics and appliances

•         Statutory health insurance provided by your employer since you started your employment.

You are taxed as a resident of Country X.

You do not have a drivers' license in Country X and do not own a car.

You have joined a sporting club in Country X, with whom you participate in group rides and social events on a frequent basis.

You attended language courses both in person and on-line for some months to learn the national language in Country X.

You and Person A anticipate staying in Country for the period of Person A's 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 assets in Australia

•         A property (the Property) jointly owned by you and person A where you had both resided until each of you had departed for Country X. The Property has been rented out while you are in 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. You are jointly responsible for the mortgage on the property which you continue to pay while in Country X. You have not used the address of the Property on any documents

•         Jointly held private health insurance with Person A

•         Some furniture, camping/outdoor equipment, paperwork and some keepsakes in storage

•         Shares; and

•         A bank account.

Your personal mail is sent to your parent's address, except for mail relating to the joint mortgage of the Property that is being sent to Person A's parent.

You have let your Australian membership associated with your profession lapse.

You contacted the Australian Electoral Office to inform them of your overseas address and have enrolled as an overseas elector.

You did not advise 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 do not have any formal connection to any social or sporting club in Australia.

You have not travelled to Australia since you departed on Date 1 and will not return to Australia prior to the end of the ruling period.

Your and Person A's future plans involve visiting Australia in Christmas time and you will hold your wedding in Australia in the upcoming income year. 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

Application 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 to join Person A who has a contract to work in Country X for several years.

•         While in Country X you have an employment contract for some years, which may be extended.

•         You have obtained the relevant visa to enable you to live and work in Country X for the duration of your employment contract, which may be extended.

•         In Australia you have the Property, which is rented out, shares, a bank account, some furniture and personal items, private health insurance and a mortgage over the Property.

•         You have family in Australia, but do not have any formal social or sporting connections.

•         You have joined a sporting club in Country X which demonstrates a routine and habit associated with living in Country X.

•         In Country X you have a bank account, furniture, personal items and health insurance.

•         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, with the intention to travel to Australia for short periods in future income years.

You were in Australia for 183 days or more during one of the income years being covered by the ruling period. However:

•         During this period the Property was being rented and was not available to you while you and Person A were residing in the leased property in Country X. Your settled lifestyle in Country X demonstrates that you do not have a usual place of abode in Australia and the Commissioner is satisfied that your usual place of abode has become the property located in Country X.

•         You did not have any intention to take up residence in Australia during this 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 as you do not meet any of the residency tests.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).