Edited version of private advice

Authorisation Number: 1051891050888

Date of advice: 2 September 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes for the 20XX income year?

Answer

Yes.

This ruling applies for the following period periods:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are a citizen of both Australia and Country Y.

You received your Country Y passport in the 20XX income year.

You were offered a job and accepted the job in Country Y in the 20XX income year.

The job is a full-time permanent position in Country Y.

You left Australia on XX XXXX 20XX.

It was your intention when you left Australia to go permanently and not to reside in Australia.

You are a resident of Country Y for taxation purposes.

You rent accommodation in Country Y with your sibling and their partner.

You took all of your personal belongings to Country Y with you.

You have paid the rent on both rental properties rented by you and your sibling property 1 (September 20XX - September 20XX) and property 2 (October 20XX - current).

You returned to Australia on XX March 20XX to visit your family and for tourism purposes.

You did not have a return flight booked when you arrived in Australia as your airline did not have flights available for booking for 2 months in advance.

You booked this flight one day prior to travelling to Australia.

You were then not able to leave due to the pandemic.

You considered trying to book flights back to Country Y, but the pandemic meant the risk was high and it was not feasible to book a flight back.

You booked a flight for XX July 20XX and this was cancelled due to your application for exemption being denied.

You have now booked a flight for X September 20XX and have applied for another exemption.

The duration of your physical presence in Australia was extended beyond your initial planned duration for a number of reasons:

•         No return flights to Country Y available.

•         Even after flights restarted, a combination of the dire COVID-19 situation in Country Y and an adverse family health history resulted in Australian doctors advising against return to Country Y on health grounds.

Health Background

•         your sibling, whose premises you moved into, has an extremely reactive disease and is highly immunocompromised. They were instructed by the Doctor to voluntarily self-isolate (to avoid catching Covid) for the entire duration of the overseas lockdowns (which ended in July 20XX).

•         your parent also has the disease, and they have been stressed during this pandemic for both you and your sibling.

•         you have genetic markers for the disease, and have been undergoing testing to measure your own immune compromisation, given the strong immediate family history. Doctors in Australia advised against moving back into the overseas residence, for your own health, as well as the health of your sibling and their partner.

You are working for your employer in Country Y remotely in Australia.

You performed a short-term work assignment for an Australian company on a casual basis during a COVID enforced reduction in demand for your Country Y employment duties.

You were placed on leave during the above period by your Country Y employer.

While in Australia you have done tourist trips ranging from a few days to weeks.

You have stayed with your parents and in short term rental.

You do not have a spouse or any dependants.

You have a bank account and Australian listed shares in Australia.

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 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, as applied to an individual, are defined in subsection 6(1) of the ITAA 1936.

The definition offers four tests to ascertain whether each individual taxpayer 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.

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

Where an individual does not reside in Australia according to ordinary concepts, they will still be an Australian resident if they meet the conditions of one of the other tests.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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'. These definitions have been highlighted in cases as being definitive observations of the meaning of resides (see Viscount LC in Levene v Commissioners of Inland Revenue [1928] AC 217 and Logan J in Stockton v Federal Commissioner of Taxation [2019] FCA 1679).

The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains " home ": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235... [W]here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as " home ", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

Case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test:

•         Physical presence

•         Intention or purpose of presence

•         Family and business/employment ties

•         Maintenance and location of assets, and

•         Social and living arrangements.

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

It is important to note that not one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

We consider that your circumstances are consistent with you residing in Australia.

This is because:

•         You have been in Australia since XX March 20XX.

•         You did not have a return flight booked back to Country Y.

•         You have been working for your Country Y employer in Australia since arriving in March 20XX.

•         You made no attempts to leave Australia and return to Country Y until you booked a flight in XXX 20XX.

•         You booked a flight for XX XXXX 20XX to return to country Y and this was cancelled, and you were not granted an exemption.

•         You have now booked another flight for X XXX 20XX in the hope that you will get an exemption to leave Australia.

You have been living in Australia for a significant period now and your usual habits and connections are such that you are considered to be residing in Australia.

You are a resident of Australia under the resides test.

Domicile test

Under the domicile test, you are a resident of Australia if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Domicile

Whether your domicile is Australia is determined by the Domicile Act 1982 and the common law rules on domicile.

Your domicile is your domicile of origin (usually the domicile of your father at the time of your birth) unless you have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and you must hold the positive intention to make that country your home indefinitely. Your domicile continues until you acquire a different domicile. Whether your domicile has changed depends on an objective consideration of all relevant facts.

In your case you were born in Australia. Your domicile of origin is Australia.

You were granted Country Y citizenship in XXXX 20XX and this became your domicile of choice.

You returned to Australia on XX March 20XX and have been living in Australia ever since. You have resumed your domicile in Australia.

Permanent place of abode

If you have an Australian domicile, you are an Australian resident unless the Commissioner is satisfied that your permanent place of abode is outside Australia. This is a question of fact to be determined in light of all the facts and circumstances of each case.

'Permanent' does not mean everlasting or forever, but it is to be distinguished from temporary or transitory.

The courts have held that the phrase 'permanent place of abode' calls for a consideration of the town or country where a person is located. It does not extend to more than one country, or a region of the world.

The Full Federal Court in Harding v Commissioner of Taxation [2019] FCA 29 held at paragraphs 36 and 40 that key considerations in determining whether a taxpayer has his or her permanent place of abode outside Australia are:

(a)  whether the taxpayer has definitely abandoned, in a permanent way, living in Australia; and

(b)  whether the taxpayer is living permanently in a specific country.

Paragraph 23 of Taxation Ruling IT 2650 Residency - Permanent place of abode outside Australia sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode:

(a)   the intended and actual length of the taxpayer's stay in the overseas country;

(b)   whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c)   whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

(d)   whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

(e)   the duration and continuity of the taxpayer's presence in the overseas country; and

(f)    the durability of association that the person has with a particular place in Australia, i.e. maintaining assets in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

As with the factors under the resides test, no one single factor is decisive, and the weight given to each factor depends on the individual circumstances.

The Commissioner is not satisfied that your permanent place of abode is outside Australia. This takes into account that:

•         you were briefly living and working in country Y from XXX 20XX to XX XXX20XX

•         you have not returned to Country Y since arriving in XXXX 20XX

•         you have been in Australia for a significant period of time

•         you are not able to leave Australia at this stage.

You are a resident of Australia under the domicile test outlined in the definition of 'resident' in subsection 6(1) of the ITAA 1936.

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 have been in Australia for 183 days or more in the 20XX income year. We now need to consider whether we are satisfied that, during the 20XX income year, your usual place of abode was outside Australia and your intention was to not take up residence in Australia.

You have been in Australia since XX March 20XX. You made an attempt to leave Australia in July 20XX and this was cancelled due to you not being able to secure an exemption to leave. You have booked another flight on XX September 20XX. You have been working remotely for your Country Y employer in Australia.

You were only in Country Y living in the rented accommodation in a Country Y town for approximately X months. You lived with your sibling and their partner.

While you were in Australia your sibling and their partner moved accommodation to a different Country Y town and you have never lived in the second rental in Country Y.

Based on your circumstances, the Commissioner is not satisfied that your usual place of abode was outside Australia for the 20XX income year and that you did not intend to reside in Australia.

Superannuation Test

An individual is a resident of Australia if they are either a member of the superannuation scheme established by deed under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, or they are the spouse, or the child under 16, of such a person.

You are not a contributing member of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test.

Conclusion

You satisfy the resides, domicile and 183-day tests of residency and so are a resident of Australia for income tax purposes for the year ended 30 June 20XX.