Edited version of private advice

Authorisation Number: 1052316030172

Date of advice: 10 October 2024

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes from XX 20XX?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June XX

Year ending 30 June XX

The scheme commenced on:

XX 20XX

Relevant facts and circumstances

You are a Country A citizen. You were born in Country A.

You lived and worked in Country B from XX to XX.

On XX 20XX, you left Country B and arrived in Australia with your partner.

Your partner is a Country C citizen.

You and your partner met in Country B.

Prior to arriving to Australia, you lived in a rental apartment in Country B.

You and your partner entered Australia with a Working Holiday Visa (Visa 417). Your intention is to apply Permanent residency visa after you pass your English test on XX 20XX.

You also plan re-apply Working Holiday visa before XX 20XX.

In 20XX, you travelled to Country A to visit your family and friends and to Australia, other countries for leisure.

In 20XX, you travelled to Country A and Country C to visit your family, friends and attend friend's wedding and you travelled other countries for leisure and travel with family.

Prior to arriving in Australia, you travelled to Country A to visit family, friends and attend friend's wedding and you travelled other countries for leisure.

You travelled to Country B in XX 20XX for a few days to visit family, friends and attend a friend's wedding. You also plan to travel to Country A and other countries for couple of months in 20XX.

You departed Australia on XX 20XX.

You plan to travel back to Australia in early XX 20XX to work for few months.

In Australia, you lived in Airbnb and short-term rental accommodations. You do not have tenancy agreements.

You use your last short-term accommodation as your mailing address, located at XX State AA.

In Australia, you worked for 2 days with livestock in XX 2024 and 1 month in a fruit packing factory.

You have bought a car with your partner and you opened a saving bank account in Australia.

You hold a Country A driver's licence and you plan to convert to an Australian driver's licence when you settle in an area in Australia.

You have a saving bank account in Country B.

Your family members are citizens of Country A and they are living in that country.

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 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... 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 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.

Application to your situation

You are not a resident of Australia under the resides test for 20XX, 20XX income years based on the following:

•         you have only been in Australia for a few months in the 20XX and 20XX income years

•         you do not have fixed address in Australia.

•         you do not have a long-term lease arrangement.

•         you are arrived in Australia on a temporary working holiday, subclass 417 visa.

•         you do not have permanent employment in Australia.

•         You intend to apply for permanent residency on xx 20XX.

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.

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 Country A and your domicile of origin is Country A. You arrived in Australia on XX 20XX under a temporary visa.

It is considered that you did not abandon your domicile of origin in XXXX and acquire a domicile of choice in Australia. You are not entitled to reside in Australia indefinitely and while living in Australia, you only held a temporary work visa which is valid until XX 20XX.

Therefore, your domicile is Country A, 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 have not been present in Australia for 183 days or more during the 20xx income year.

You have not been in Australia for 183 days or more in the 20XX income year (as of the date of this ruling).

Therefore, you are not a resident under this test for the 20XX or 20XX income year.

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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the years ended 30 June 20XX and ending 30 June 20XX.

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