Edited version of private advice

Authorisation Number: 1051570476873

Date of advice: 20 November 2019

Ruling

Subject: Residency - leaving Australia

Question

Did you cease to be a resident of Australia for tax purposes from when you relocated to country X?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

Year ending 30 June 2020

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You are an Australian citizen and hold an Australian passport.

You do not have a spouse or dependants.

You left Australia about 10 years ago and at the time you had no plans to return to Australia to live in the foreseeable future. Your intention remains the same.

In 20XX, you commenced working on rotation on a foreign flagged vessel that never sailed to Australia. You worked on a roster of several months working followed by several months not working.

In 20XY, you arrived in country X with a yacht you owned.

Prior to relocating to country X, you lived on the yacht in various countries.

Since you relocated to country X, you have returned to country X for the period of time you were rostered off the vessel. When not working, you have spent the majority of your time in country X and have travelled to other destinations infrequently.

You subsequently commenced working on another vessel.

Your employer flies you from country X to where the vessel is operating at the time.

Your yacht has been permanently moored at a marina in country X since you relocated there and you lived on the vessel until recently. All your personal possessions were stored on the yacht.

You recently commenced living in an apartment in country X and moved some of your possessions into the apartment. You left some possessions on your yacht as you still spend time on the vessel.

All your official correspondence is sent to either the marina address where your yacht is moored or to the apartment.

You were granted a temporary visa for country X. The visa was extended and then cancelled once you received a permanent resident visa.

You purchased a motor vehicle in country X.

Your wages are paid into a back account you have in country Y.

You have two bank accounts in country X.

You have a drivers licence in country X.

You have a mobile phone number in country X.

In country X, you have a network of friends, actively participate in the local community and hold several memberships.

Since originally leaving Australia, you have visited infrequently and in some years not at all.

Since 20XY, you have made return visits to Australia lasting approximately 4 weeks, 2 weeks, 2 weeks and 3 weeks respectively.

On your visits to Australia you have stayed either with friends or in hotel accommodation.

You have an Australian bank account and an Australian drivers licence.

You have relatives in Australia.

You have an ownership interest in several investment properties in Australia.

You are not a member of any organisations in Australia.

You do not have an Australian mobile phone number.

You are not on the Australian electoral roll and are not registered with Medicare.

You are not eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) and are not the spouse or child under 16 of such a person.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

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

·        the resides test,

·        the domicile test,

·        the 183 day test, and

·        the superannuation test.

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

The resides test

The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides.

Taxation Ruling TR 98/17 identifies the following general factors as being useful in determining whether someone is residing in Australia:

·        physical presence

·        intention or purpose

·        family or business ties

·        maintenance and location of assets

·        social and living arrangements.

In your case, you left Australia about 10 years ago to live and work overseas indefinitely, have only returned here occasionally since then, and do not have a place of abode in Australia.

Therefore, you no longer reside in Australia and are not a resident under the resides test.

The domicile test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

'Domicile' is a legal concept determined according to the Domicile Act 1982 (Domicile Act) and common law rules.

A person's domicile is usually their country of origin unless they acquire a different domicile of choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice.

The Commissioner's view on how a domicile of choice may be acquired can be found in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia, at paragraph 21:

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice.

The courts have provided guidance on the concept of domicile over the years. Although the recent case decided by the Full Federal Court of Australia, Harding v Commissioner of Taxation [2019] FCAFC 29 (Harding), did not have to determine the domicile of the taxpayer, the court restated some observations from earlier cases concerning evidence of an intention to change domicile:

30. ....In Terrassin v Terrassin (1968) 14 FLR 151, Selby J observed that a person alleging a change of domicile had to prove by "clear and cogent evidence that the change has taken place" (at 154-155). His Honour referred to the decision of Lord Curriehill in Donaldson v M'Clure (1857) 20 D. 307, where his Lordship said:

... it is proper to keep in view what is meant by an animus or intention to abandon one domicile for another. It means something far more than a mere change of residence. It imports an intention not only to relinquish those peculiar rights, privileges, and immunities which the law and constitution of the domicile confer on the denizens of the country,-in their domestic relations ... in their purchases and sales and other business transactions ... in their political or municipal status,-and in their daily affairs of common life; but also the laws by which the succession to property is regulated after death. The abandonment or change of a domicile is therefore a proceeding of a very serious nature, and an intention to make such an abandonment requires to be proved by satisfactory evidence.

36. ....As Lord Macnaghten observed once in Winans v Attorney-General [1904] AC 287 at 291:

Lord Chelmsford's opinion [in Udny v Udny (1869) LR 1 HL, Sc 455] was that "in a competition between a domicil of origin and an alleged subsequently acquired domicil there may be circumstances to shew that however long a residence may have continued, no intention of acquiring a domicil may have existed at any one moment during the whole of the continuance of such residence. The question in such a case is not whether there is evidence of intention to retain the domicil of origin, but whether it is proved that there was an intention to acquire another domicil."

In your case, you:

·        left Australia to live and work overseas indefinitely and have only returned occasionally since then

·        have not had a place of abode in Australia since you left

·        relocated to country X from another country in 20XY

·        lived in your yacht at a marina before moving into an apartment

·        received a temporary visa and then a permanent resident visa

·        established two bank accounts in country X

·        obtained a country X drivers licence

·        obtained a country X mobile phone number

·        have a network of friends in country X, actively participate in the local community and hold several memberships.

Domicile

From the information provided, although you established a strong presence in country X after you relocated, there is insufficient evidence to say that you had proven an intention to change your domicile from Australia to country X prior to being granted the permanent resident visa. Staying in a country using a temporary visa is not considered enough to evidence a change of domicile.

However, it is accepted that there is enough evidence to prove that your domicile changed from Australia to country X after you were granted the permanent resident visa.

Therefore, you ceased to have a domicile in Australia after you were granted the permanent resident visa.

Permanent place of abode

A person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. 'Permanent' does not mean everlasting or forever but it is to be distinguished from temporary or transitory.

In FC of T v Applegate (79 ATC 4307; (1979) 9 ATR 899), Fisher J described 'permanent place of abode' as being:

.....the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place.

In your case, although your domicile was still in Australia prior to being granted the permanent resident visa, the Commissioner is satisfied that you had a permanent place of abode outside Australia during that period.

Domicile test summary

As the Commissioner is satisfied that you had a permanent place of abode outside Australia prior to being granted the permanent resident visa, and you ceased to have a domicile in Australia from when the permanent resident visa was granted, you were not a resident under the domicile test of residency from 20XY onwards.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here.

You are not a resident under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.

You are not a resident under this test.

Summary

You ceased to be a resident of Australia for tax purposes from when you relocated to country X.