Edited version of private advice

Authorisation number: 1052382545984

Date of advice: 10 April 2025

Ruling

Subject: Residency

Issue 1 Residency

Question 1

Are you an Australia resident for tax purposes for the XXX Financial Year?

Answer

Yes.

Question 2

Are you an Australia resident for tax purposes for the XXX Financial Year?

Answer

No.

Issue 2 Income

Question 1

Is the income you received from your foreign employment assessable in Australia for the XXX Financial Year?

Answer

Yes.

Question 2

Is the income you received from your foreign employment assessable in Australia for the XXX Financial Year?

Answer

No.

This ruling applies for the following periods:

Period End Date 30 June XXX

Period End Date 30 June XXX

The scheme commenced on:

1 July XXX

Relevant facts and circumstances

You were born in Australia

You are a citizen of Australia and Country X

You are an XXX resident and intend on applying for citizenship/permanent residency in XXX

You had a job overseas working offshore as an XXX

You are currently employed with XXX in XXX, doing XXX work offshore and have some years left on this contract

On XXX you moved into a permanent home in XXX

On XXX you were issued a XXX Visa for XXX (a limited stay of 1 year and is a renewable visa). This is the process to use before you can apply for the XXX visa which is renewed every 5 years

All entry visas prior to the XXX Visa were temporary tourist visas

On XXX your rental lease in Australia expired

You expect to live outside of Australia indefinitely

You donated all your belongings to friends

You do not have a spouse or children

You hold a personal bank account which is in debt which you are paying off

You do not have investments in Australia

You have an overseas bank account

You advised the Australian Electoral Commission and Medicare you are overseas

You are not a Commonwealth employee

You do not have a Public Sector Superannuation Scheme (PSS) account

You do not have Private health

Your intention is to travel every 28 days from XXX to XXX, XXX and Australia to see your parents and siblings

When entering Australia, you state you are visiting Australia

You have no professional, social or sporting connections in Australia.

You are connected with some recreational activity in XXX through different recreational activity camps

You have an Australian driver's license

You have an Australian company that is in the process of being finalised and potentially shut down in the XXX financial Year.

XXX FINANCIAL YEAR TRAVEL DATES

You advised the following travel dates to and from Australia:

XXX - Perth to XXX

XXX - XXX to Adelaide

You advised you did not travel overseas any other time during this period.

XXX - City A to XXX to live and work in XXX

XXX - XXX to City B to see family and friends while on holidays

XXX - City B to XXX to move the company vessel to XXX

XXX - XXX to City A to help a friend

XXX - City A to XXX to return to XXX to go on holiday 9 days

XXX FINANCIAL YEAR TRAVEL DATES

XXX - XXX to City B to assist friends needing help moving out of the house they were renting

XXX -City B to XXX to live and work offshore

XXX - XXX to City B to visit family for 10 days before returning to XXX

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1936 subsection 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Issue 1 Residency

Question 1

Am I a resident of Australia for tax purposes for the XXX Financial Year?

Summary

You are a resident of Australia for taxation purposes for the XXX financial year as you have met at least one of the residency tests in this period.

Question 2

Am I a resident of Australia for tax purposes for the XXX Financial Year?

Summary

You are not a resident of Australia for taxation purposes for the XXX financial year as you did not meet any of the residency tests in this period.

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.

Only one of the tests needs to be met for an individual to be a resident of Australia for tax purposes.

Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals.

The resides 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'.

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 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

XXX financial year - we have considered this test in relation to your situation. You had not relocated to another country for an indefinite period of time and still had a physical presence in Australia for some time. You had not established permanent living arrangements until almost the end of the financial year.

Therefore, you meet the resides test for this period and are a resident of Australia for taxation purposes during the XXX financial year.

XXX financial year - In this financial year you have relocated to another country for an indefinite period of time and have established permanent living arrangements overseas. You will only make minimal return visits to Australia.

Therefore, you are no longer residing in Australia and are not a resident of Australia under this test for the XXX financial year.

The 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

XXX financial year - you were born in Australia and your domicile was, and is, Australia. There is no evidence to say your domicile changed to any other county.

XXX financial year - there is insufficient evidence to say that your domicile has changed to the foreign country as you are neither a permanent resident or citizen of the foreign country.

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

XXX financial year - it cannot be viewed that you had a fixed place of abode in any other country that would identify that you were living permanently in the overseas country. You had not definitely abandoned, in a permanent way, living in Australia.

Therefore, you are a resident of Australia under the domicile test for this period.

XXX financial year - you did not have an abode available to you in Australia during this period. The overseas property is the place where you will stay when you are not travelling to other countries.

The duration and continuity of your presence in the foreign country supports that your permanent place of abode has changed and has been and will be overseas during this period.

After considering your activities during this period the Commissioner is satisfied that your permanent place of abode is in the foreign country during this period.

Therefore, you are not a resident of Australia under the domicile test for this period.

The 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

XXX financial year - you spent more than 183 days in Australia during the XXX financial income year and the Commissioner is not satisfied that your usual place of abode was outside Australia.

Therefore, you are a resident of Australia under this test for this period.

XXX financial year - you will not be in Australia for 183 days or more in this income year.

Therefore, you are not a resident under this test for this period.

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).

Therefore, you are not a resident under this test.

Residency Conclusion

You only need to meet one of the residency tests to be considered a resident of Australia for taxation purposes.

We have considered your residency status for taxation purposes in Australia during the period covered by the ruling period is as follows:

XXX financial year - A resident for the whole income year as you had met the resides, domicile and the 183 day tests for the income year.

XXX financial year - 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 XXX financial year.

Issue 2 - Assessable Income

Question 1

Is the income you receive from your foreign employment assessable in Australia for the XXX Financial Year?

Summary

Yes. As you were an Australian resident for taxation purposes over the relevant period, all foreign sources of income are assessable in Australia under section 6-5 of the ITAA 1997 and taxed accordingly.

Question 2

Is the income you receive from your foreign employment assessable in Australia for the XXX Financial Year?

Summary

No. You are a non-resident of Australia for taxation purposes performing work in a foreign country. Therefore, the income is not assessable or taxable in Australia.

Detailed reasoning

Section 6-5 of the ITAA 1997 provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

Application to your situation

XXX financial year - you are a resident of Australia for taxation purposes; therefore, all foreign and local sources of income are assessable in Australia under section 6-5 of the ITAA 1997 and taxed accordingly.

XXX financial year - section 6-5 of the ITAA 1997 sets out that a non-resident of Australia is only taxed on their Australian sourced income.

As you are a non-resident in the XXX financial year, foreign income is not assessable in that year.

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