Edited version of private advice

Authorisation Number: 1052363536181

Date of advice: 22 May 2025

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes as defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You are an Australian citizen. Your spouse is an Australian citizen.

You and your spouse have two dependants, they are also Australian citizens.

On XX XX 20XX you departed Australia with your family to live in Country A.

Your intention upon departure was to leave Australia permanently and indefinitely.

You received permanent residency for Country A on XX XX 20XX. You have the right to permanently reside and work in Country A.

On XX XX 20XX you returned to Australia with your family.

You have maintained the intention to reside permanently in Country A since arriving in Australia.

You applied for Country A citizenship on XX XX 20XX.

Intention

You intended to return to Australia for an extended period and return to Country A before XX 20XX.

To maintain your employment and for your children to attend the beginning of the school year you must return to Country A before XX XX 20XX, which is your intention.

Family and social connections

You have two school age dependants. Your children are currently enrolled in school in Australia. Before this, they both attended school in Country A.

Your children maintain their enrolment at the school in Country A and will continue their schooling there upon your return to Country A.

You have not developed any professional connections or joined any clubs in Australia. You are not a member of any professional associations or sporting clubs in Australia.

You are a member of the ABC Association in Country A. Membership fees have been paid for this year.

You have flown to Country A to participate in the meetings and maintain your membership with the organisation throughout your time in Australia.

You have been maintaining your social connections in Country A during your return trips.

Income and employment

You are employed at Company A in Country A.

You are currently taking sabbatical which has allowed you to work remotely XX 20XX to XX 20XX.

You have no employment in Australia and do not derive any income from Australian sources.

Your spouse was employed in Australia from XX XX 20XX to XX XX 20XX.

Between XX XX 20XX and XX XX 20XX, you have made several trips to Country A for work purposes.

During the 20XX income year you spent less than 183 days in Australia.

Between XX XX 20XX and XX XX 20XX, you have spent more than 183 days in Australia.

Accommodation and assets

You are currently leasing a property located in Country A.

The lease agreement started on XX XX 20XX and has an end date of XX XX 20XX.

You previously owned a house in Country A that you sold in XX 20XX.

Prior to arriving in Australia, you booked short term accommodation from XX XX 20XX to XX XX 20XX.

In XX 20XX you purchased a property located in Australia. You made the decision to purchase the property due to the ongoing difficulties you had in finding suitable accommodation.

You purchased the property with the intention of using it as an investment property upon your return to Country A.

On XX XX 20XX a letter of offer was signed for the purchase of your Australian property, with settlement occurring on XX XX 20XX, provided a contract of sale is prepared and agreed to.

You currently reside in the property with your family. When you travel to Country A you reside in your leased property.

Most of your personal belongings are located in your home in Country A. You returned to Australia with only a few suitcases. You have made no plans to ship your personal belongings to Australia.

You do not hold any investments with Australian financial institutions and companies.

You hold three everyday banking accounts for daily use in Australia.

You have savings and retirement accounts in Country A.

You and your spouse have already lodged income tax returns in Country A for the 20XX income year. You have both lodged as full-year tax residents.

You intend to continue to fulfill your tax obligations as residents in Country A, including filing income taxes for 20XX.

You and your spouse have removed yourselves from the Australian electoral roll.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(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:

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.

Taxation Ruling TR 2023/1 "Income Tax: Residency test for individuals" (TR 2023/1) provides guidance on the Commissioner's interpretation of the ordinary meaning of the word 'resides' as set out in subsection 6(1) of the ITAA 1936.

Paragraph 39 of TR 2023/1 states, 'Where your intention changes, and you stay longer in Australia than initially intended, the facts surrounding the entire stay in Australia must be considered, not merely the original intended length of stay. For example, if during your stay in Australia you decide to migrate to Australia, you are regarded as resident from the time that your behaviour becomes consistent with residing here.'

Paragraph 53 of TR 2023/1 states that social and living arrangements can also be considered in determining whether an individual resides in Australia for tax purposes. This factor involves the consideration of the way individuals interact with their surroundings, which may include joining sporting or community organisations, or enrolling children in school, during their stay in Australia.

Furthermore, paragraph 54 of TR 2023/1 states it is the routine and habit associated with the social and living arrangements that is indicative of residency rather than the existence of hobbies and recreational pursuits themselves.

Application to your situation

You are a resident of Australia under the resides test from XX XX 20XX, and the 20XXincome yearbased on the following:

Period of physical presence in Australia

•                     You have primarily resided in Australia from XX XX 20XX.

Intention or purpose of presence

•                     Your intention was for you and your family to reside in Australia for a minimum of 12 months.

•                     When returning to Australia you had the intention to treat Australia as a home, at least for the time being, though not necessarily forever.

Behaviour while in Australia

•                     Your behaviour while in Australia has been inconsistent with a temporary visit. You have purchased a property, enrolled your children in school and worked remotely for your employer while in Australia.

Family and business/employment ties

•                     Your spouse and children have accompanied you to Australia.

•                     Your spouse has gained employment while in Australia.

Maintenance and location of assets

•                     You maintain banking accounts in the Country A and Australia.

•                     You own a property in Australia, which you have been residing in.

•                     You hold a substantial amount of cash in Australia.

Social and living arrangements

•                     While you have rented accommodation available to you in Country A, the frequency and length of stays during the period under consideration do not support the concept of residing in Country A.

•                     Your children are enrolled in school in Australia.

Upon your return to Australia your physical presence, living arrangements, accommodation, immediate family connections, and the enrolment of your children in school all indicate that your actions have been consistent with establishing residence in Australia. You would therefore be considered an Australian resident under the 'Resides' test from XX XX 20XX.

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, you were born in Australia and your domicile of origin is Australia.

It is considered that you abandoned your domicile of origin in Australia and acquired a domicile of choice in Country A in 20XX based on the following:

•                     You received permanent residency for Country A on XX XX 20XX.

•                     You had been living in Country A from 20XX until returning to Australia.

•                     You have the right to permanently reside and work in Country A.

•                     You have subsequently applied for Country A citizenship on XX XX 20XX.

•                     You have maintained your employment in Country A while in Australia.

•                     You will be returning to Country A in the 20XX income year, as required by your employer.

•                     You currently have a lease on a property ending on XX XX 20XX.

Your domicile of choice is Country A, and you are not a resident of Australia under the domicile test. It is regarded that you did not re-acquire a domicile of choice in Australia when returning.

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

You have been present in Australia for 183 days or more during the 20XX income year. Therefore, you will be a resident under this 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.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they 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.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836.

Application to your situation

The Commissioner is not satisfied that your usual place of abode was outside Australia for the relevant income year based on the following:

•                     You have resided in Australia from XX XX 20XX with your family.

•                     You will remain living in Australia until after the end of the 20XX income year.

•                     While your overseas rental accommodation has remained available while you are in Australia, you have only made a few brief return trips.

•                     You have established a home in Australia upon your return including renting short-term accommodation and purchasing a property in XX 20XX.

•                     You and your family are currently citizens of Australia.

•                     Your children are currently enrolled in school in Australia.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Paragraph 20 of TR 2023/1 explains that the ordinary concepts test asks whether an individual's presence in Australia is usual and settled (as opposed to temporary and causal) and considers the nature, duration, and quality of the individual's presence in Australia, as well as their intention to treat Australia as home.

Application to your situation

Other than a few brief trips back to Country A, you have been present in Australia with your family since XX XX 20XX. Taking this into account and the circumstances while you have been residing in Australia the Commissioner is not satisfied that your usual place of abode was outside Australia, and you did not intend to take up residence in Australia.

It is acknowledged you have access to accommodation in both Australia and Country A and it may be your ultimate intention to return to Country A.

The Commissioner is not satisfied that you did not intend to take up residence in Australia for the relevant income year because:

•                     You and your family are Australian citizens and therefore have the permanent right to reside in Australia.

•                     You have been in Australia for more than 12 months.

•                     You purchased property in Australia in XX 20XX.

•                     You are residing with your family in Australia.

•                     You have enrolled your children in school in Australia.

•                     Your behaviour is consistent with residing in Australia.

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 test and so are a resident of Australia for income tax purposes from XX XX 20XX until income year ended XX XX 20XX.

You satisfy the resides and 183-day tests of residency and so are a resident of Australia for income tax purposes for the income year ended XX XX 20XX.

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