Edited version of private advice

Authorisation Number: 1052362566274

Date of advice: 25 February 2025

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for tax purposes under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the 20XX and 20XX income years?

Answer 1

No.

Question 2

Is the income you derived from your employment performed outside Australia during the financial year periods 20XX, 20XX and 20XX subject to tax in Australia?

Answer 2

No.

This private ruling applies for the following periods:

DD MM YY

The scheme commences on:

DD MM YY

Relevant facts and circumstances

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Your family and connection with Australia

Your country of origin outside of Australia where you are also a citizen. You are not a citizen of another country.

You initially commenced visiting Australia on a visitor visa.

On the specified date, you were granted a temporary partner visa subclass 309.

On the specified date, you were granted a sub-class 100 permanent visa. You have been an Australian permanent resident since this date.

You and your family resided overseas until the specified date.

Between the specified dates, you and your family rented an apartment overseas.

As you could not afford the rent for both units in the separate countries, your family now resides Australia permanently and you rent a room or stay in a hotel rooms overseas when working.

You financially support your family and only socialise with family when in Australia.

You will continue returning to Australia your family resides in Australia permanently and are Australian citizens.

You have not applied for Australian citizenship and will apply for citizenship when you reside in Australia permanently.

You have not lodge foreign tax returns whilst in Australia.

As you are not an Australian citizen you do not notify the electoral roll or Medicare when leaving the country.

You and your family have overseas health insurance.

You hold overseas bank accounts and hold a joint bank account with your spouse in Australia.

Your current employment role and connection overseas

Your currently employed as a United nations officer for project services.

Current job title is Administrations and Operations Senior officer and you are stationed overseas.

Date of appointment was date and expiration of appointment is date this can be renewed.

Fixed term appointment, current grade specified.

You are exonerated from paying income tax overseas as you are classified under Article V of the Convention on the Privileges and immunities of the United Nations.

You spend majority of your time living and working overseas.

Overseas you maintain professional and social networks and have further maintained social network with friends in your country of origin.

You are a tax resident overseas and complete tax declarations with a tax exempt status as a staff member of the United Nations.

Periods of residency per financial year

20XX to 20XX - specified.

20XX to 20XX - specified.

20XX to 20XX - specified.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 6-1

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Summary - residency

As you do not meet any of the statutory tests in relation to residency, you are not considered a resident of Australia for the specified income years.

Detailed reasoning

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 circumstances.

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 the income tax years, based on the following:

•                     During the income year, you spent number days in Australia

•                     During the income year, you spent number days in Australia

•                     During the income year, you spent number days in Australia

•                     You have demonstrated a settled pattern of living, maintaining a transitory nature of travel to Australia

•                     When you travel to Australia, you intend to reside with your family and to return overseas to continue your employment overseas.

•                     When you stay overseas for work you rent a room or stay in a hotel

•                     Since the specified date, your family has resided in Australia permanently

•                     Your family stay in Australia when you return to work as maintaining a residence in both countries was too expensive

•                     You intend to settle in Australia on a permanent basis in the future

•                     Your social connection with Australia consists of spending time with your family

•                     You have no other professional or sporting connections in Australia.

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 parent 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 overseas and your domicile of origin is overseas. You were granted a temporary visa and granted a permanent visa on the specified date. You will apply for citizenship in the future when you plan to reside in Australia permanently.

It is considered that you did not abandon your domicile of origin overseas and acquire a domicile of choice in Australia. Whilst you may have obtained a permanent visa to remain in Australia, you still work permanently overseas and are not a citizen of any other country your domicile of origin is overseas. At this stage you have not changed your domicile of choice as you don't intend to reside permanently in Australia for the periods of the private ruling decision.

Therefore, your domicile is overseas, 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 in Australia for 183 days or more in the specified 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

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 specified income years.

Issue 2 - Foreign employment income

Summary

As we have determined you are not an Australian resident for the above ruling periods you will not be required to lodge an Australian tax return for the financial years specified in the ruling.

Detailed reasoning

Section 6-5 of the ITAA 1997 provides that when you are a resident of Australia for taxation purposes, your assessable income includes ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

However, if you are a foreign resident, your assessable income includes only income derived directly or indirectly from all Australian sources during the income year.

As the Commissioner has determined you are not an Australian resident for taxation purposes. The foreign employment income you have derived will not be assessable in Australia. Therefore, you will not be required to declare this income in an Australian tax return for the financial years specified in the ruling.

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).