Edited version of private advice

Authorisation Number: 1052250376644

Date of advice: 16 May 2024

Ruling

Subject: Residency

Question

Are you an Australian resident for tax 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 commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Country B and are a citizen of Country B (by birth) and Australia.

You lived in Australia from 20YY to 20YY, at which time you returned to live in Country B.

Your travel habits back to Australia prior to the ruling period were short term, with your visits to Australia being intermittent and irregular. The length of time of these visits were short, exceeding no longer than XX days each visit.

The purpose of your trips to Australia were to tend to legal matters, and to visit family who live in Australia.

You hold a Permanent Residence Visa in Australia.

You have not developed any professional, social, or sporting connections in Australia, nor have you developed social connections in Country B.

You have a drivers' license in Country B and Australia.

When you would visit Australia, you would stay with family members.

You owned a property in Country B, which has now been sold. While you were not living in the flat, it was left vacant.

When you moved to Australia in 20YY, you paid a deposit on an Australian property. This property was purchased with your former spouse. Your name was not recorded on the title.

You have bank accounts in both Country B and Australia.

When you initially moved to Australia in 20YY, you bought your personal effects with you. They are still at an extended family members house.

You have not received any income from Australian sources.

You have never lodged an Australian income tax return.

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.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(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 (the domicile test, 183-day test and Commonwealth superannuation fund test).

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 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 resides test is about 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. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia.

The period of physical presence or length of time in Australia is an important factor when considering whether you reside here, but it is not a determinative factor. Importantly, there is a distinction between 'staying' in Australia and residing in it. Merely staying in Australia is normally insufficient. You must have some connection to Australia that characterises your presence as 'residing' in it. This will be informed by the factors set out above.

In many cases, a visit to Australia of less than 6 months is not sufficient time to be regarded as residing here. This is because a person does not usually establish a durable connection to Australia in this time.

Subjective intention, while important, is not decisive and its weight will depend on the circumstances including the contemporaneity of the statement. Residency is not established merely by asserting an intention to live in Australia permanently.

Your behaviour relevantly includes the way you live as part of the regular order of your life. If the way you live reflects a degree of continuity, routine or habit, coupled with other factors such as intention, it may be consistent with residing in Australia.

For example, if you enter Australia and take up long-term accommodation, employment, enrol children in school and take part in regular extracurricular activities, this would demonstrate behaviour consistent with residing here, particularly when coupled with other factors such as an intention to make your home here.

Conversely, if you usually live overseas and, while in Australia, you travel around or display no settled routine or behaviour, or you have only a short period, or short periods, of settled routine or behaviour coupled with an intention to holiday in Australia before returning home to another country, you will likely not be regarded as a resident under the ordinary concepts test.

Application to your situation

You are not a resident of Australia under the resides test for the ruling period based on the following:

•         You have lived in Country B since 20XX, and your return trips to Australia have been to either visit family or tend to legal matters.

•         Your visits to Australia during the ruling years were only for short periods (up to 14 days at a time) and you only sent a small part of each year in Australia.

•         The periods of time you have spent in Australia have not reflected a degree of continuity, routine or habit that is consistent with someone who resides in Australia.

•         You have no business/employment ties with Australia.

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.

Domicile

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

In your case, you were born in 19XX and your domicile of origin is Country B. You immigrated to Australia in 20YY and left in Australia 20YY, returning to Country B.

It is considered that you have not abandoned your domicile of origin in Country B and acquired a domicile of choice in Australia; for example, you have not been granted citizenship of Australia.

Therefore, your domicile is Country B, and you are not a resident of Australia under the domicile test.

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 were or will not be present in Australia for 183 days or more during the financial years within the ruling period. 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 do not satisfy any test of residency and so you are not a resident of Australia for income tax purposes for the ruling period.

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