Edited version of private advice

Authorisation Number: 1051849537387

Date of advice: 16 June 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No

This ruling applies for the following period periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Country A.

You moved to Australia with your family.

You are a citizen of Country A and Australia.

In 20XX, you entered a contract to work full time for a foreign employer based in Country B.

You returned to Australia to visit your spouse during breaks numerous times every year.

You departed Australia for Country B for the last time.

Due to the Covid 19, your contract was suspended.

Your contract was eventually terminated.

You stayed at your residence in Country B until left for Country A.

You are employed full time in Country A.

Your intention is to reside outside of Australia indefinitely.

Your spouse is an Australian citizen.

Your spouse is in the process of applying for a visa to join you.

Your spouse is unable to depart Australia due to the Covid 19 travel restrictions and visa requirements and continues to work in Australia for financial reasons.

Your spouse's intention is to reside with you indefinitely in Country A.

You and your spouse have rented a property.

You are in the process of buying a car and property in Country A.

You lived in your own home with your spouse.

Your spouse is currently living in the property and you have leased X% of it out.

You and your spouse jointly own another property in Australia, the property is rented out.

You maintain bank accounts in Australia to pay for mortgages and outgoing expenses relating to the properties and your motor vehicle.

You maintain your Union membership in Australia.

You have advised your bank that you are a foreign resident.

You own a property and a car in Country B.

You have bank accounts and investments in Country A.

Your private health insurance in Australia has been suspended as you have health insurance in Country A.

You have lodged tax returns in Country A.

You have also lodged property tax returns in Country B.

You lodged Australian tax returns as a resident for the years you worked in Country B.

You are planning on visiting Australia for a period of X to X months. You were injured and need care provided by your spouse.

It is not your intention to stay in Australia after this time as you will return to Country A to resume employment in which you are currently being paid disability payments.

You and your spouse are not eligible members of a Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation 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', regarding 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.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three 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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

•                    whether the person is physically present in that country at some time during the year of income

•                    the history of the person's residence and movements

•                    if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits

•                    if the person is outside the country for part of the relevant income year, the purpose of the absences

•                    the family and business ties which the person has with the particular country, and

•                    whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.

In your case, you are a citizen of Country A and Australia, you were employed and based in Country B for many years. Due to the Covid 19, your employment was terminated. You then moved to the Country A and have taken up full-time employment. The position is an ongoing position.

As a citizen, you don't have restrictions to live and work in Country A. You rent a property which is for your personal use only. You are in the process of purchasing a property. Your spouse intends to reside with you indefinitely, however, your spouse is unable to depart Australia due to the Covid 19 travel restrictions and visa requirements and continues to work in Australia for financial reasons. You intend to reside outside of Australia indefinitely.

You are not a resident of Australia for taxation purposes under this test.

Domicile Test

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

'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.

Your domicile of origin is Country A as you were born in Country A, your domicile changed to Australia due to your Australian citizenship. You have taken active steps to reside in Country A and to resume your Country A domicile.

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.

The Commissioner is satisfied that you have a permanent place of abode outside Australia and you do not have the intention to make Australia your home indefinitely.

You are not a resident of Australia for taxation purposes under this test.

The 183-day test

Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

In your case, you are planning to visit Australia as you were injured in and need care provided by your spouse.

It is not your intention to stay in Australia after this time as you will return to your employment.

You are not a resident of Australia for taxation purposes under this test as you will not be in Australia for 183 days.

Superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees.

Based on the information you have provided; you are not a resident of Australia for taxation purposes under this test.

Conclusion

You are not a resident of Australia for taxation purposes.