Edited version of private advice

Authorisation Number: 1052341238340

Date of advice: 19 December 2024

Ruling

Subject: Residency

Question 1

Are you an Australian resident for tax purposes for the income years ending 30 June 20YY and 30 June 20YY?

Answer 1

Yes.

This ruling applies for the following periods:

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 Australia and are a citizen of Australia by birth.

You were employed by Employer A in MM 20YY.

You were stood down by Employer A from MM 20YY to MM 20YY.

You were offered the opportunity to return to this role in Country B, however you were unable to return to this role. At this point, your employment with Employer A was terminated.

You worked at other employers in the same role between MM 20YY and MM 20YY in Australia.

You were offered a role - the equivalent of your previous permanent role at Employer A - in MM 20YY. A requirement of this role is to live in Country B.

You returned to permanent employment with Employer A, with a start date of DD MM 20YY.

Your recurrency training for Employer A commenced on DD MM 20YY. You moved from Australia to Country B in MM 20YY.

You are currently on a fixed term work visa in Country B, and intend to become a permanent resident of Country B as soon as you are permitted to.

You and your spouse intend to live in Country B until (at least) your planned retirement and do not intend to return to live in Australia on a permanent basis before this time. You will then decide whether you wish to retire in Country B or return to Australia.

You lived in a serviced apartment in Country B from MM 20YY until MM 20YY. You currently have a permanent fixed term home rental lease which you have resided in since MM 20YY.

You are married with school aged children.

Your family are currently still living in Australia.

You financially support your family in Australia.

Your spouse and children do not intend to remain in Country B after the year 20YY, when you expect one of your children to finish high school.

You are attempting to place your child in an Australian boarding school to finish high school. If a place becomes available for this child to attend boarding school, your other family members will move to Country B earlier.

Your child undertaking high school may remain in Australia after they finish high school to study, where they will live independently as an adult. Alternatively, they may move to join you in Country B - depending on their personal study preferences.

Since you departed Australia in 20YY, you have visited your family in Australia for XX days since your employment commenced.

You typically have several days at your Australian residence with your family while working a full roster. You took additional leave where you took a family trip in Australia.

You own a vehicle in Australia, and continue to retain ownership of the property your family reside in.

You previously owned an investment property in Australia but sold this in MM 20YY.

You intend to give your Australian vehicle to your eldest child once they reach driving age.

Once your Australian property has been vacated by your family, it will be rented out with the intention to hold it as a long-term investment.

Your Australian Superannuation accounts are to remain dormant as you have not made any contributions since your departure and will not make any further contributions.

Your personal mail is being sent to your Country B residence.

You are not a member of the Public Sector Superannuation, nor are you an eligible employee of the Commonwealth Superannuation Scheme.

You have removed yourself from the Australian electoral role, and you have placed your Australian healthcare coverage on a two-year suspension.

You have no affiliation to any clubs within Australia and are an active member of a lifestyle club in Country B.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

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 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, as summarised below:

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, 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 together with an intention to return to that place and an attitude that that place remains "home". 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 a resident of Australia under the resides test for the period of the rulingbased on the following:

•                Your family continue to reside in Australia in a home which you own.

•                You make frequent return trips to Australia to stay in your family home which remains available to you at all times.

•                Your family do not currently plan to move to Country B with you until the year after your eldest child finishes high school.

•                You financially support your family in Australia.

•                You have your own car in Australia which you use when you are residing in your home in Australia.

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

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, your domicile is in Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country B.

Therefore, your domicile is Australia.

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:

•                the intended and actual length of the taxpayer's stay in the overseas country

•                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

•                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

•                whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence

•                the duration and continuity of the taxpayer's presence in the overseas country

•                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

The Commissioner is not satisfied that your permanent place of abode was outside Australia during the income years because you returned to Australia on a frequent basis and did not cut many ties to Australia, for example, Consequently, it is considered that you did not definitely abandon, in a permanent way, living in Australia.

Therefore, you are 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 not present in Australia for 183 days or more during the 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 and domicile tests of residency and so are a resident of Australia for income tax purposes for the year ended 30 June 20YY and year ending 30 June 20YY.

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