Edited version of private advice

Authorisation Number: 1052330700517

Date of advice: 29 November 2024

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for tax purposes?

Answer 1

Yes. You are a resident of Australia for tax purposes from DD MM 20YY for the year ended 30 June 20XX and the whole year ended 30 June 20XX.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

DD MM 20YY

Relevant facts and circumstances

Your country of origin is a foreign country (Country A), and you are a citizen of the foreign country by birth.

You are not a resident of any other countries for taxation purposes.

You travelled to Australia on DD MM 20YY on Visa A. You have remained in Australia since that date, with the exception of a short trip to Country A.

The visa held does not allow you to remain in Australia permanently.

On DD MM 20YY you were granted another visa, which allowed you to enrol in an Australian study course. You completed this course on DD MM 20YY. Upon completion, you returned to your original visa.

You have not applied or been granted any other visas; however you intend to apply for a temporary visa that will allow you to remain in Australia. (with sponsorship coming from your current employer).

You have been employed for approximately XX months. It is this employer that intends to formally commence the sponsorship process.

You have not lodged any foreign income tax returns while living in Australia.

You have no dependents. Your immediate family has remained in Country A, and you do not financially support them.

You have commenced a relationship with an Australian resident.

You lived at X addresses within the same city area. Property A for X months, property B for X months, property C for X months.

You have developed a sporting connection to Australia.

You have a driver's license issued by the Country A.

Before travelling to Australia, you were residing in your parents' home in Country A.

In Australia, you currently reside at XXXX. You have signed a sub-tenancy agreement to rent this property. This agreement commenced on DD MM 20YY. Prior to this, you were residing in a share house as a sub-tenant.

You do not own any properties.

You do not receive any income from sources outside of Australia. You do not have an employment position or job being held for you in any overseas country.

You are not a Commonwealth of Australia Government employee for superannuation purposes.

You are not a member of the Public Sector Superannuation Scheme.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Overview of the law

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 (ordinary concepts) test,

•                     the domicile test,

•                     the 183 day test, and

•                     the superannuation test.

The primary test for deciding the residency status of an individual is whether they reside 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.

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

The resides test

Under the ordinary concepts test, you are a resident if you reside in Australia. The term 'reside' is not defined in the Australian income tax law and has its ordinary meaning. The ordinary meaning 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'.

The ordinary concepts test is asking whether your presence in Australia is usual and settled in contrast to temporary and casual. This is informed by both the nature, duration and quality of the person's physical presence and an intention to treat Australia as home. Factors that commonly inform the relevant association with Australia are:

•                     period of physical presence in Australia

•                     intention or purpose of presence

•                     behaviour while in Australia

•                     family, and business or employment ties

•                     maintenance and location of assets, and

•                     social and living arrangements.

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals.

It is important to note that not 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. Any connection with another country does not diminish a connection to Australia; that is, the test is not about dominance or exclusivity.

Application to your situation

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

•                     Physical presence. You have been physically present in Australia since the date of your arrival in XXXX 20XX, except for X weeks where you visited your home country.

•                     Intention or purpose. Your stated intention to live in Australia long-term is evidenced by you establishing your home and life in Australia with your partner of X months, and intention to obtain a visa to enable you to stay in Australia.

•                     Behaviour. Your behaviour since being in Australia shows that you have settled in Australia and reflects a degree of continuity, routine or habit that is consistent with residing in Australia. Your behaviour supports your stated intention to reside in Australia.

•                     Family and business/employment ties. You worked at one job for X months. You have no job being held for you in the foreign country. You live with your partner.

•                     Maintenance and location of assets. You have no significant assets in the foreign country.

•                     Social and living arrangements. You have sporting connections in Australia, professional connections to your employment and personal connection to your partner. You do not maintain any professional, social or sporting connections in the foreign country.

You do not have any strong ties remaining in the foreign country and you have established your life in Australia since your arrival until the present time. Since that time you have displayed behaviour consistent with someone residing in Australia.

Therefore, from the date you arrived in Australia in DD MM 20YY you are viewed as being a resident of Australia for taxation purposes.

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

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.

In Australia, the concept of domicile is governed by common law as modified by the Domicile Act 1982.

Domicile considers whether there is a legal relationship between a person and Australia. There are 3 types of 'domicile:

•                     A 'domicile of origin', which is attributed to each individual at birth.

•                     A 'domicile of dependence', which is relevant where a person (such as a minor) lacks capacity to acquire their own domicile and their domicile is determined by reference to someone else's domicile (such as a parent).

•                     A 'domicile of choice', which is the domicile a person, with the capacity to do so, acquires voluntarily.

You always have a domicile and you can only have one domicile at any point in time. Your particular domicile continues until you acquire a different one, either by choice or operation of the law. You cannot abandon a domicile of origin without replacement.

To acquire a domicile of choice you must have both lawful physical presence in a foreign country and an intention to make your home indefinitely in that country.

When considering intention, we have regard to objectively observable conduct. While assertions of intention will always be relevant, if there is a difference between that assertion and the conduct, we may rely on the conduct.

Obtaining a visa to migrate to a particular country would be consistent with an intention to make your home indefinitely in that country. A working visa, even for a substantial period of time, would usually not be sufficient evidence of an intention to acquire a new domicile of choice.

Application to your situation

In your case, your domicile of origin is the foreign country, and you are also a citizen of the foreign country. At this time, you do not have a permanent right to reside in Australia as you are neither a citizen of Australia nor the holder of a permanent resident visa during the ruling period. Consequently, there is insufficient evidence to demonstrate that you have acquired a domicile of choice in Australia.

Therefore, your domicile is still the foreign country 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 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 been in Australia for 183 days or more during each financial year covered by the ruling period, so you are a resident under the 183-day test unless the Commissioner is satisfied that your usual place of abode was outside Australia, and you do not have an intention to take up residence in Australia.

In the context of the 183 day test, a person's usual place of abode is the place you usually live and can include a dwelling or a country. A person can have only one usual place of abode under the 183 day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

Based on the facts as set out in the ruling, it is clear your usual place of abode has become Australia where, since XXXX 20XX, you and your partner have lived in rented properties.

Furthermore, it is noted that your intention is to take up residence in Australia.

Therefore, you are viewed as being a resident of Australia under this test for the ruling period. This is because you have been here for more than 183 days in the respective income years and the Commissioner has not reached the relevant state of satisfaction that your usual place of abode is overseas.

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.

This test will not apply if the individual is a member of the Public Sector Superannuation Accumulation Plan (PSSAP) and the test will only apply to members of the PSS and CSS which are now closed to new members.

Application to your situation

You are not a contributing member of 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 outlined above, for the ruling period the Commissioner accepts that you are a resident of Australia for taxation purposes under the resides test and the 183-day test. Under the resides test, the Commissioner regards you as residing in Australia according to ordinary concepts. Under the 183-day test the Commissioner is not satisfied that you have a usual place of abode outside Australia and that you do not intend to reside in Australia.

You are a resident of Australia for the period of the ruling commencing on DD MM 20YY.

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