Edited version of private advice

Authorisation Number: 5010073231495

Date of advice: 29 March 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for income tax purposes?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

General

You were born in one Country (the Birth Country) and a citizen of that country.

You are a citizen of another Country (the Resident Country)

Your spouse and dependants are citizens of the Resident Country.

You ceased to be a tax resident of the Resident Country in December 20XX.

Your spouse ceased to be a tax resident of the Resident Country in October 20XX.

You sold the family home in the Resident Country in January 20XX.

You and your family, including your spouse, resided on a sea-going vesselwhere you own a berth.

You first arrived in Australia in February 20XX, on tourist visas.

Due to the COVID-19 pandemic the sea-going vesselsuspended its services in March 2020, when you and your family were required to disembark.

Your tourist visas were extended for one year, expiring in February 20XX.

You have applied for a "Business Innovation and Investment (Provisional) visa (subclass 188C)" (the 188C Visa) visa.

If your application for the 188C Visa is successful you will be able to reside in Australia for up to five years. After this time, should you so choose, you would be able to apply for a "Business Innovation and Investment (Permanent) visa (subclass 888)" (the 888 Visa) visa, which would grant you permanent residency.

You do not intend to return to the Resident Country to live.

You do not have a usual place of abode outside of Australia.

Your domicile of choice is not Australia.

You have also applied for a Residence visa in another Country should your application for the 188C Visa be rejected.

You have no intention of spending any more time on the sea-going vesselin the financial year ending 30 June 20XX.

Family and social connections

Along with your spouse you have dependants.

You family came with you and is with you in Australia.

Accommodation and assets

Since arriving in Australia, you have lived in two rented properties, the second of which is your current residence.

The lease on your current residence is for an indefinite period.

Your main assets are currently held through a registered retirement savings plan of the Resident Country with a Bank of the Resident Country.

Income and employment

You have opened up bank accounts in Australia.

You have obtained an Australian tax file number (TFN).

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

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

Relevant legislative provisions

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

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Summary

You are a resident of Australia for the relevant period as you meet at least one of the resides tests as described under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

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.

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd edition, 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'.

Application to your circumstances

The resides (ordinary concepts) test

•         You have been in Australia since February 2020.

•         You have your family with you, and you live in a residence that has an indefinite period on its lease.

•         You are no longer a tax resident of the Resident Country and have no intention of returning to the Resident Country to live.

•         You are applying for a 188C Visa the successful outcome of which would enable you to apply for a permanent 888 Visa after five years residence in Australia.

•         You brought your family with you to Australia and they live with you.

•         You have opened bank accounts in Australia and obtained a TFN.

These facts taken as a whole demonstrate that you are residing in Australia according to the ordinary meaning of the word.

The domicile test

Generally speaking, persons entering Australia temporarily would be considered to have maintained their foreign 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 Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in Australia e.g., through having obtained a migration visa. You do not meet the domicile test as you have not clearly shown that you intend to make Australia your home indefinitely. While you have surrendered your tax residency of the Resident Country and that you have applied for the 188C Visa, you have not yet been granted that visa. Furthermore, you do not have a permanent place of abode, evidenced by the fact that you have lived in two residences both of which are leased. You continue to live in leased accommodation. You have also not resided here in Australia for what is considered by us to be a substantial period of time.

The 183-day test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You meet the 183 days test as you have been living in Australia for more than 183 days and that you do not have a usual place of abode outside of Australia.

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 child under 16 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

Based on all the facts, your behaviour is consistent with residing in Australia as you satisfy at least one of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a resident of Australia for income tax purposes for the year ended 30 June 20XX.

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