Edited version of private advice

Authorisation Number: 1051806325334

Date of advice: 22 February 2021

Ruling

Subject: Residency for tax purposes

Question

Will you be a resident of Australia for taxation purposes for the current income year?

Answer

No

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia and are a citizen of Australia.

You are also a citizen of Country X.

You have been living and working in Country X for over ten years and have not been a tax resident of Australia for that period.

You came to Australia, with a return airplane ticket, to visit and be with a relative who was ill.

You were accompanied to Australia by your spouse.

Your relative subsequently passed away. You are an executor of the estate.

You have remained in Australia because of COVID-19 and have used this time to travel and to administer the estate.

You have a return flight to Country X booked.

While in Australia, you have stayed in temporary accommodation such as hotels, airbnb's and your parent's residence.

While in Australia, you have continued to be employed by your Country X employer.

You have a residence in Country X.

You have an investment property in Australia and a bank account for receipt of rent and payment of expenses.

You are not a member of any clubs or community organisations in Australia.

You do not have any children.

You have never been an employee of the Commonwealth Government of Australia for superannuation purposes.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

The terms 'resident' and 'resident of Australia' are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (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 test,

•         the 183 day test, and

•         the superannuation test.

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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

In your case, you have been forced to stay in Australia longer than anticipated due to COVID-19. However, you have booked a flight to return to your usual country of residence and your behaviour while in Australia is consistent with that of a visitor and not that of a resident.

Therefore, you are not residing in Australia and will not be a resident of Australia under this 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.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country (section 10 of the Domicile Act 1982).

Paragraph 21 of Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) states that:

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.

In your case, although your domicile of origin is Australia, it is considered that your domicile has changed to Country X based on such factors as the granting of Country X citizenship and the length of time you have spent living in Country X.

Therefore, you will not be a resident under this test.

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 183 days or more 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.

Although you have been present in Australia for more than 183 days in the 2021 income year, the Commissioner is satisfied that your usual place of abode is outside of Australia and you have no intention of taking up residence here.

Therefore, you will not be 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 or the Commonwealth Superannuation Scheme, or that person is the spouse or child under 16 of such a person.

You are not a resident under this test.

Conclusion

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