Edited version of private advice

Authorisation Number: 1052381457290

Date of advice: 17 April 2025

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes as defined in subsection 6(1) of the Income Tax Assessment Act 1936 from the date of your departure on DD/MM/20YY?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ending 30 June 20YY

The scheme commenced on:

DD MM 20YY

Relevant facts and circumstances

You were born in Country A and are a citizen of both Country A and Australia.

You became a citizen of Australia on DD MM 20YY.

Your spouse accepted an offer of employment in Country B. A requirement of this role was to relocate permanently to Country B.

You left Australia on DD MM 20YY, to move permanently to Country B.

You received confirmation your rental offer on a property was successful on DD MM 20YY, this was a XX month contract on a fully furnished property. You were required to pay 12 months' rent in advance.

You applied for an ancestry visa for Country B, which was granted for a five-year period from DD MM 20YY until DD MM 20YY.

Your intention at this time was to likely live in Country B for this entire period, at which point your spouse may be ready to retire and you may return to Australia.

You own a property in Australia that was your family home before leaving for Country B.

Your children and their families have lived in this property whilst you have been overseas.

You executed a lease agreement between you and your children for your Australian property on DD MM 20YY with no set end date.

You shipped your personal belongings and bicycle to Country B when you left.

You owned two vehicles in Australia, of which you sold one before leaving and left the other for your children to use.

You signed an extension to your lease in Country B, that expires on DD MM 20YY.

Your spouse was advised by their employer on DD MM 20YY that they were required to retire from the organisation they were a part of. Your spouse received a letter dated DD MM 20YY confirming the requirement.

You and your spouse made the decision to stay in Country B and they are looking for employment opportunities in Country B.

You applied for and obtained a driver's licence in Country B.

You have suspended your private health insurance policy in Australia.

You cancelled your mobile phone plan before moving to Country B and have a Country B mobile number.

You state you advised your Australian bank of your Country B address and that you have become a non-resident for tax purposes.

You notified the Australian Electoral Office that you are living overseas permanently and asked them to register you as an eligible overseas elector, this will expire on DD MM 20YY.

You have registered to vote in Country B.

You have become a member of a gym, joined a running club and made many social connections, as well as volunteering and mentoring young writers in Country B.

You obtained a TV Licence, library membership and supplied invoices for broadband and energy in your name at the Country B property.

Neither you, nor your spouse were a Commonwealth of Australia Government employee for superannuation purposes.

You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990.

You are not an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

You are not the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

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 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 since leaving Australia on DD MM 20YY based on the following:

•                     you have not returned to Australia since leaving for Country B on DD MM 20YY

•                     you rented a property in Country B for an initial XX month period, and have subsequently signed for a further extension up until DD MM 20YY

•                     after your spouse was advised they must retire from their employment, you made the decision to stay in Country B, and your spouse is seeking employment opportunities in Country B.

•                     you have obtained a Country B drivers licence and mobile phone

•                     you have suspended your private health insurance policy in Australia

•                     you state you advised your Australian bank of your Country B address and that you have become a non-resident for tax purposes

•                     you notified the Australian Electoral Office that you are living overseas permanently and asked them to register you as an eligible overseas elector

•                     you have become a member of a gym, joined a running club and made many social connections, as well as volunteering and mentoring young writers in Country B.

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 immigrated to Australia and became an Australia citizen on DD MM 20YY.

We also consider that although your domicile of origin Country A, sometime after you relocated and became a citizen of Australia your domicile of choice became Australia.

Therefore, your domicile 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 satisfied that your permanent place of abode is outside Australia because:

•                     you rented a property in Country B for an initial XX month period, and have subsequently signed for a further extension up until DD MM 20YY

•                     you have leased your property in Australia

•                     you have not returned to Australia since leaving for Country B on DD MM 20YY

•                     you only intend to return for short visits for special family occasions.

Therefore, 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 been in Australia for 183 days or more in the 20YY income year.

You are not a resident under this test in the 20YY income year because you will not be in Australia for more than 183 days.

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 satisfied that your usual place of abode was outside Australia, from DD MM 20YY for the 20YY income year based in the following:

•                     your spouse accepted employment in the Country B and it was a requirement to permanently relocate there

•                     you shipped your personal belongings and bicycles to Country B when you left

•                     you signed a 12 month lease in Country B, paying 12 months' rent in advance

•                     although you have a home in Australia, your children have been living in the property since you left Australia and you subsequently made a formal rental agreement with them

•                     you subsequently signed an extension to your Country B lease until DD MM 20YY.

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.

Application to your situation

The Commissioner is satisfied that you did not intend to take up residence in Australia from DD MM 20YY for the 20YY income year because:

•                     your spouse accepted permanent employment in Country B and it was a requirement to permanently relocate there

•                     you both departed Australia on DD MM 20YY

•                     you were granted a 5 year Country B visa

•                     your intention at this time was to likely live in Country B for this entire period, at which point your spouse may be ready to retire and you may return to Australia

•                     you signed a XX month rental agreement for a property in Country B and prepaid the rent for the whole period

•                     you suspended you private health insurance in Australia, notified your banks and Australian Electoral Commission, cancelled you mobile in Australia and registered to vote in Country B.

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 from DD MM 20YY and the relevant ruling period which follows.

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