Edited version of private advice

Authorisation Number: 1052168717153

Date of advice: 19 September 2023

Ruling

Subject: Residency

Question 1

Am I a resident of Australia for tax purposes for the income year ending 30 June 20XX?

Question 2

Am I a resident of Australia for tax purposes for the income year ending 20 June 20XX?

Answer

Yes.

This ruling applies for the following periods:

Year ended XX/XX/20XX

Year ended XX/XX/20XX

The scheme commenced on:

XX/XX/20XX

Relevant facts and circumstances

You were born in and are a citizen of Country B.

You became a permanent resident of Australia through your family in the 19XXs.

You attended school and tertiary study in Australia.

You have lived and worked in Australia since your family came to Australia in 19XX.

You are not married and have no dependents. You have a sibling who resides in Australia.

You have a Resident Return Visa (RRV, subclass 155), granted XX/XX/20XX, which you have held since 19XX and continually renew.

You have the following ties to Australia:

•         You work as a professional in XX, Australia.

•         You own a dwelling in Australia which you reside in when in Australia. This dwelling is furnished with your personal belongings and household goods. When you are not in Australia, the dwelling is left vacant.

•         You hold an Australian driver's licence.

•         You own a motor vehicle registered in XX.

•         You are a member of a golf club in XX.

•         You have an Australian bank account.

You have the following ties to Country A:

•         You work as a professional in Country A.

•         You are paid by the Government of Country A as a professional.

•         You have travelled to Country A for work since 19XX.

•         You lease an apartment in Country A with the lease set to expire at the end of XX/20XX.

•         You have a bank account in Country A.

•         You have personal belongings and household possessions in Country A.

•         You have permanent resident status in Country A and have held this for many years.

•         You are a tax resident of Country A.

During the income year ended XX/XX/20XX, you were present in Australia for XX days.

During the income year ended XX/XX/20XX, you were present in Australia for XX days.

During the income year ended XX/XX/20XX, you were present in Australia for XX days.

During the income year ended XX/XX/20XX, you were present in Australia for XX days.

You intend to continue to travel between Country A and Australia and reside in both Australia and Country A.

Between 19XX and 20XX you lodged income tax returns in Australia as a non-resident.

For the income years ended XX/XX/20XX, XX/XX/20XX and XX/XX/20XX, you lodged income tax returns in Australia as a resident.

You use your Australian address on your travel and boarding cards.

You have not advised any authorities or bank of your intention to depart Australia on a permanent basis.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 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 (also referred to as the ordinary concepts 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.

Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals.

We have considered the statutory tests listed above in relation to your situation as follows:

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:

•         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.

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 situation

We have taken the following into consideration when determining whether you meet the resides test:

•         Between 19XX and 20XX inclusive, you lodged Australian tax returns as a non-resident.

•         In 20XX you lodged an Australian tax return as a resident.

•         In the 20XX financial year you spent XX days in Country A and XX days in Australia

•         In the 20XX financial year you spent XX days in Country A and XX days in Australia.

•         You own a home in Australia which you use while in Australia. The home is furnished and left vacant when you are not in Australia.

•         While overseas, you stay in a leased apartment.

•         You intend to continue to work in both Australia and Country A.

•         You lodge income tax returns as a resident in Country A and have done so for many years.

•         You are a professional in Country A.

•         You are paid by the Government of Country A as a professional.

•         You are a professional in Australia.

•         You have spent considerable periods overseas in previous years.

•         You intend to travel to Australia for periods in the future and continue to maintain your position as a professional in Australia.

•         You travel on a XX-year resident return visa.

•         You maintain a Country B passport.

•         You use your Australian address on your travel and boarding cards.

•         You have not advised any authorities or bank of your intention to depart Australia on a permanent basis.

•         You have not attempted to obtain Australian citizenship.

•         You have no dependents living in Australia.

•         You have an Australian bank account.

•         You are considering selling your home in Australia and buying another home in Australia and investing additional proceeds in a property in Country A.

•         You use your Australian address for some of your mail.

•         You maintain a club membership in Australia.

•         You hold an Australian drivers' licence and maintain a registered motor vehicle.

Having a connection to, or being a resident of, another country does not necessarily diminish any connection to Australia.

While physical presence is an important consideration, physical absence does not necessarily result in non-residence. The question is whether you have maintained a continuity of association with Australia which is established by considering your connections to Australia. Your intention to maintain a home in Australia and continue to travel between countries for your work indicates you have not abandoned your ties to Australia. Your circumstances demonstrate you have not broken your continuity of association with Australia.

You are a resident of Australia under the resides test for the period XX/XX/20XX to XX/XX/20XX.

Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered.

You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test).

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.

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 your 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 situation

•         You were born in Country B and your domicile of origin is Country B.

•         You are a citizen of Country B.

•         You maintain and travel on a Country B passport.

•         You have resided in Australia since moving here with your family as a child in the 19XXs.

•         You have not applied for Australian citizenship.

•         You hold permanent resident XX status in Country A.

•         You have permanent resident status in Australia and have held 5-year resident return visas since 19XX.

•         You have current RRV granted on XX/XX/20XX.

•         Your resident return visa allows you to leave and return to Australia permanently.

In your case, you were born in Country B and your domicile of origin is Country B.

You have not taken out Australian citizenship and you maintain permanent resident status in Country A.

You have travelled to and from Country A since 19XX for your professional work and will continue to do so.

Your family moved to Australia in the 19XXs when you were a child. You completed your education in Australia and have continued to work and maintain a home in Australia. It is considered that you have been lawfully present and held the positive intention to make Australia your home indefinitely.

If you have an Australian domicile and are living outside of Australia, you will retain your Australian domicile if you intend to return to Australia on a clearly foreseen and reasonably anticipated contingency. Your intention is to travel between Australia and Country A to carry on your professional work in both countries. It is also not considered that you have abandoned your residence in Australia as it remains furnished and holds your possessions ready for your use on return to Australia.

Therefore, your domicile is Australia, and you are a resident of Australia under the domicile 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 in light of 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 phrase 'permanent place of abode' calls for a consideration of the physical surroundings in which you live, extending to a town or country. 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 situation

We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia:

•         You own a dwelling in Australia and you reside here when in Australia. The property is furnished and contains your possessions. You return to Australia and resume residence in your Australian property whenever required.

•         You have leased a dwelling in Country A for many years. This lease expired in XX/20XX. You have held on to this property's household possessions.

•         You have professional connections in Australia which you intend to continue.

•         You have an office in Country A.

•         You are paid by Country A as a professional.

•         You have travelled to work and live for extended periods in Country A since 19XX.

•         You intend to return to Australia several times a year.

Therefore, it is considered that the property you own in Australia has at all times remained your home.

You cannot have your permanent place of abode in both Australia and overseas. A permanent place of abode overseas would mean having demonstrably abandoned your residency in Australia. If you move from country to country such that it cannot be said that you are living in a particular country in a permanent way, your permanent place of abode will not be overseas and you will remain a resident of Australia. This is regardless of whether or not you have any dwellings in Australia, or whether Australia more generally can be described as your place of abode.

The Commissioner is satisfied that your permanent place of abode is in Australia.

183-day test

Where a person is present in Australia for 183 days or more during the year of income the person will be a resident, 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 situation

You have not been present in Australia for 183 days or more during either the 20XX or 20XX income years. 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 situation

You are not a member on behalf of whom contributions are being made to 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

You satisfy the resides test and the domicile test of residency, so you are a resident of Australia for income tax purposes for the years ended XX/XX/20XX and XX/XX/20XX.

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).