Edited version of privat advice

Authorisation Number: 1051891651681

Date of advice: 20 September 2021

Ruling

Subject: Residency

Question 1

Are you a non-resident for tax purposes upon leaving Australia on XXXX?

Answer

No. You were a resident of Australia for tax purposes in the XXXX tax year.

Question 2

Are you a non-resident for tax purposes for the XXXX tax year?

Answer

Yes. You are non-resident for tax purposes since XXXX tax period. This will continue until you return to Australia and satisfy the residency tests as an Australian resident for tax purposes.

This ruling applies for the following periods:

8 January 20XX to 30 June 20XX

1 July 20XX to 30 June 20XX

1 July 20XX to 30 June 20XX

1 July 20XX to 30 June 20XX

1 July 20XX to 30 June 20XX

The scheme commences on:

8 January 20XX

Relevant facts and circumstances

Your tax agent has advised that:

•         You departed Australia to XXXX on XXXX

•         You are still a citizen of XXXX

•         You hold a working visa in the XXXX from XXXX for XXXX years. You will apply for renewal in XXXX. This visa allows you to live on a permanent basis in XXXX.

•         You are employed by XXXX.

•         You left Australia as a single person, met and married your spouse in XXXX.

•         You have no intention to return to Australia and intend to stay and work in the XXXX. This intention has been further secured by your career advancement as well as engagement & marriage to a XXXX resident. You have now advanced to be the XXXX at the XXXX.

•         Since your departure from Australia, you have come back to Australia twice. The first visit between XXXX was for a holiday and to attend to tax matters and finalising private health and the second visit between XXXX to introduce your spouse to your family members & friends both in XXXX

•         You rent an accommodation provided by the school with your spouse at XXXX

•         Your assets in XXXX include two motor XXXX, all furniture and bank accounts in XXXX Credit & Debit Accounts

•         You do not have any accommodation, furniture or motor vehicles in Australia. You have some personal items that you have in storage with your parents. You will finalise these on your next visit to Australia.

•         You do not own any property in Australia.

•         Since you left Australia, you do not have any income received from Australian sources.

•         You do not have any job to return to Australia and wish to stay in XXXX with your spouse permanently.

•         You do not have any social and sporting connections in Australia and have since moving to XXXX built new social and sporting connections there. These include gymnasium membership, dance classes, XXXX Social Club, local XXXX.

•         Your spouse XXXX has been a resident of XXXX for XXXX years and has no intention to move at this stage.

•         You have removed yourself from the electoral roll, advised Medicare of your departure to XXXX and cancelled your private health cover.

Relevant legislative provisions

Income Tax Assessment Act 1936, ss6(1)

Income Tax Assessment Act 1936, s6-5

Income Tax Assessment Act 1997, s995-1

Income Tax Assessment Act 1997, s768-910

International Tax Agreements Act 1953

Reasons for Decision

These reasons for decision accompany the Notice of private ruling for XXXX.

Summary

Residency for tax purposes

Detailed reasoning

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).

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

The terms 'resident' and 'resident of Australia', regarding 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 a 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 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.

Resides Test

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.

In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'.

The question of whether an individual 'resides' in a country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and considered the following factors as being relevant:

•         physical presence

•         intention or purpose

•         family or business ties

•         maintenance and location of assets

•         social and living arrangements.

In your case, you are still a citizen of Australia and moved to XXXX on XXXX on a working visa.

This subject is addressed in Taxation Ruling 98/17 (TR98/17) Income tax: residency status of individuals entering Australia. At paragraphs 20 and 21 it states -

20. All the facts and circumstances that describe an individual's behaviour in Australia are relevant. In particular, the following factors are useful in describing the quality and character of an individual's behaviour:

•         intention or purpose of presence;

•         family and business/employment ties;

•         maintenance and location of assets; and

•         social and living arrangements.

21. No single factor is necessarily decisive, and many are interrelated. The weight given to each factor varies depending on individual circumstances.

Your intention is to remain on a long-term residency in XXXX as you are now married with a XXXX resident. You have also satisfied the following conditions:

•         you and your spouse maintain a rental property in XXXX where you stay together. You have located all your personal belongings XXXX and have only a few personal belongings that you intend to finalise when you are back in Australia for holidays.

•         you have established an abode in XXXX where you stay in rental accommodation with your spouse.

•         you have established professional and social connections in XXXX with various friends and social organisations.

•         you are considered a non-resident for tax purposes under the resides test because:

­        you do not maintain an enduring association with Australia

­        you maintain strong family ties with your spouse in XXXX

­        you have XXXX bank accounts

­        you purchased a car and taken out insurances in XXXX

­        you have social living arrangements with various organisations in XXXX

­        you no longer have a residential rental property in Australia, but in XXXX.

Your circumstances taken together lead to a conclusion that you are a non-resident under this test for the XXXX tax year and thereafter. This may change if you decide to return to Australia and meet the residency test for tax purposes.

The Domicile Test

Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied, they have a permanent place of abode outside of Australia.

Domicile

"Domicile" is a legal concept to be determined according to the Domicile Act 1982 and common law rules. A person's domicile is in 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, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice.

As you are a citizen of Australia therefore, your domicile of origin will be Australia. Your intention is to continue to work and reside on a permanent basis in XXXX with your spouse.

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. (Applegate v. Federal Commissioner of Taxation 78 ATC 4051; 8 ATR 372 (Applegate))

In Applegate, the court found that 'permanent' does not mean everlasting or forever, but it is to be contrasted with temporary or transitory.

The courts have considered 'place of abode' to refer to a person's residence, where he lives with his family and sleeps at night.

Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia (IT 2650) provides a number of factors which are used by the Commissioner in reaching a satisfaction as to an individual's permanent place of abode. These factors include:

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

(b) any intention either to return to Australia at some definite point in time or to travel to another country;

(c) the intended and actual length of the individual's stay in the overseas country;

(d) any intention either to return to Australia at some definite point in time or to travel to another country;

(e) the establishment of a home outside Australia;

(f) the abandonment of any residence or place of abode the individual may have had in Australia;

(g) the duration and continuity of the individual's presence in the overseas country; and

(h) the durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments, place of education of the taxpayer's children, family ties.

Paragraph 24 of IT 2650 states that the weight to be given to each factor will vary with individual circumstances of each case and no single factor is conclusive. Greater weight should be given to factors (c), (e) and (f) than to the remaining factors.

In your case it is considered that you have established a permanent place of abode in XXXX as:

•         you lease and live in a rental property in XXXX with your spouse, and it remains available to you

•         you have not left XXXX since you arrived in January 2018, except for short holiday periods

•         you have XXXX bank accounts and have cancelled your Medicare and private health insurance in Australia

•         you purchased a car and taken out insurances in XXXX

•         you intend living in XXXX for a considerable and indeterminable period of time with your spouse.

The duration and continuity of your presence in Australia supports the argument that you established a long-term place of abode in XXXX. While you are a citizen of Australia, this does not outweigh the enduring association and connection you have, and maintain, in XXXX.

Whilst the question of a usual place of abode is a question of fact, generally the phrase is interpreted as the abode customarily or commonly when you are physically in a country.

Your place of abode does not have to be fixed but must have the attributes of a place of residence or a place to live. Since XXXX, your usual place of abode is XXXX.

Therefore, while you are a citizen of Australia, the Commissioner considers you have established a permanent place of abode outside Australia for tax purposes in XXXX since XXXX tax year.

The 183 days 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 present in XXXX for more than 183 days in XXXX tax year and thereafter, therefore you are a non-resident for tax purposes under this test for the year.

The superannuation Test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Sector 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 contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person.

You are not a resident for tax purposes under this test.

Application to your circumstances

On XXXX you moved to XXXX on work visa and since then have lived and worked there. You also got married to a XXXX resident and intend to stay with your spouse there. You have no intention to return to Australia. You have built long term social and family relationships in XXXX and cancelled your Medicare and private health fund in Australia. Furthermore, you have set up new bank accounts and insurances in XXXX and bought furniture and motor vehicles and obtained licence to drive in XXXX. While, you were still a resident of Australia for tax purposes for the 20XX-20XX tax year, you became a non-resident of Australia for tax purposes since 20XX-20XX tax year. This may change if you decide to return to Australia and meet the residency test for tax purposes at a future date.