Edited version of private advice

Authorisation Number: 5010072631584

Date of advice: 10 March 2021

Ruling

Subject: Residency for taxation purposes

Question

Are you a non-resident for Australian income tax purposes from 1 July 20XX?

Answer

Yes.

This ruling applies for the following periods:

Year ending 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

General

You were born in a Foreign Country.

You are a Dual Citizen of Australia and that Foreign Country.

You departed Australia permanently on 1 July 20XX.

You obtained a Residency Permit visa for Another Foreign Country in 20XX.

The visa is valid for three years and renewable in 20XX.

Your visa was supplied by your Employer.

You have removed yourself from the Australian Electoral Roll.

You have cancelled your private health insurance.

You did not lodge any Australian income tax returns.

You and your family have no intention of returning to Australia.

Family and social connections

You have a spouse.

You have dependants.

Your family moved to the Foreign Country to be with you in 20XX.

Your family's visa application for residency is still being processed, delayed due to restrictions placed because of the COVID-19 pandemic

You have a drivers' licence to allow you to drive in the Foreign Country.

You have a Security Pass, that you obtained in the Foreign Country.

You are unable to join any professional or community associations in the Foreign Country due to restrictions imposed because of the COVID-19 pandemic.

You are not a member of any Australian clubs or associations.

Accommodation and assets

You retain your former residential home in Australia.

You did not sell the property as the property market at the time was depressed.

You rented the property in 20XX.

You rented the property via an agency.

You remain responsible for the mortgage on the property.

Apart from mail connected to your mortgage all mail was redirected to your current address in the Foreign Country.

You cancelled all of your subscriptions and business communications that had been addressed to your former residential address in Australia.

You sold most of your personal effects, including both your cars and furniture in Australia prior to your departure to the Foreign Country.

You receive rental income from your property in Australia.

You receive income from your investments in a cryptocurrency.

You have tried to cancel your account with the cryptocurrency but have found that this is difficult to do from outside Australia.

Upon your arrival in the Foreign Country you purchased a vehicle and furniture.

You have opened a bank account with a major Bank of the Foreign Country for your salary and everyday living expenses.

You live in permanent, rented accommodation in a City in the Foreign Country.

The accommodation was provided for the sole use of you and your family.

The accommodation was provided to you by your Employer, in 20XX.

You did not lodge any foreign tax returns while living overseas.

Income and Employment

You do not have any employment positions or jobs being held open for you in Australia.

You are employed by an Employer in the Foreign Country.

You perform Line Management duties, in a full-time capacity.

Your employment is for an indefinite period.

You and your spouse have never been employed by the Commonwealth of Australia.

You and your spouse or dependants are not a member of the Public Sector Superannuation Scheme (PSS).

You and your spouse or dependants are not eligible for the Commonwealth Superannuation Scheme (CSS).

Relevant legislative provisions

Subsection 995-1(1) of the Income Tax Assessment Act 1997.

Subsection 6(1) of the Income Tax Assessment Act 1936.

Reasons for decision

Summary

You are a non-resident for tax purposes in Australia, effective from 1 July 2019 to the 30 June 2023.

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', in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:

•         the resides test,

•         the domicile (and permanent place of abode) test,

•         the 183 day test, and

•         the superannuation test.

An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. Therefore, to be deemed a non-resident an individual would need to be able to not satisfy the conditions of all four tests.

The resides (ordinary concepts) test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

The Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year:

•         physical presence in Australia;

•         nationality;

•         history of residence and movements;

•         habits and 'mode of life'

•         frequency, regularity and duration of visits to Australia;

•         purpose of visits to or absences from Australia;

•         family and business ties with Australia compare to the foreign country concerned; and

•         maintenance of a place of abode.

The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive.

Physical presence in Australia

Taxation Ruling TR 1998/17 Income tax: residency status of individuals entering Australia considers physical presence or length of time by itself is not determinative of residency. An individual's behaviour as reflected by a degree of continuity, routine or habit that is consistent with residing in Australia is relevant.

You have not lived in Australia since 1 July 20XX. In the Foreign Country you were issued with a Residency Permit visa, renewable after three years. While this one factor is evidence of non-residency, other evidence needs to be considered before non-residency can be determined.

Nationality

You are a Foreign-born dual-national holding Australian Citizenship.

History of residence and movements

Since the 1 July 20XX you have departed Australia and not returned. In 20XX your family also left Australia to join you in the Foreign Country. This is one factor that would evidence your intention to settle down to life in the Foreign Country.

Family and Business Ties with Australia compared with the Foreign Country

Your family is with you in the Foreign Country. You have no employment opening waiting for you in Australia, whereas, you are employed in the Foreign Country. Your only business ties in Australia is your investment in a cryptocurrency and your rental income from your rental property which was your former home.

Maintenance of a place of abode

To be a non-resident you must demonstrate that your living and working arrangements are consistent with making the Foreign Country your home and show that you are not simply in the Foreign Country as a visitor or a tourist but are living there with a settled way of life.

Even though you still maintain a property in Australia you do live in a residential property in the Foreign Country which is for you and your family's exclusive use. On the information that you have provided you have demonstrated that your living and working arrangements demonstrate an intention to live outside Australia permanently.

On balance, your situation would not satisfy the conditions of the resides test meaning that you are a non-resident of Australia, and a resident of the Foreign Country under ordinary concepts.

The domicile test

This test is more applicable for when individuals leave Australia either to migrate or to work overseas. Generally speaking, persons leaving Australia would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. In order to show that a new domicile of choice in a foreign country has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country, for example, through having obtained a resident or work visa.

In your case, for the period in which this ruling relates, your domicile is considered to be in the Foreign Country as you have taken active steps to change your domicile to the Foreign Country. These steps include obtaining the Foreign Country's Residency Permit, obtaining employment and taking your family with you. Therefore, you are not a resident under this test.

The 183-day test

The Commissioner considers that this test is meant to apply to visitors and migrants, rather than to Australians who are leaving the country. Never-the-less, it is a test of physical presence in which a person must be in Australia for more than half the income year (183 days), to be considered a resident of Australia for tax purposes.

In your case for the financial year ending 30 June 2020 you were out of Australia for more than 183 days because you left on 1 July 2019. For the rest of the period in which this ruling relates, you have continued to remain in the Foreign Country and have not returned to Australia for any reason. You are therefore not a tax resident under this test.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or dependant of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.

You are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test.

Your residency status

As you do not meet the conditions of any of the tests for Australian residency for tax purposes, you are not a resident of Australia for tax purposes.

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