Edited version of private advice

Authorisation Number: 1051891798790

Date of advice: 2 September 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes after departing Australia in late 20XX?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Country B (your parent was in the Country A armed forces) but you are a Country A citizen born to Country A parents.

You held a Permanent Resident visa in Australia. Your right to return to Australia under this visa expired in recent years.

For some years you lived and worked in Australia. You lived in rented accommodation in City A, except for the three months prior to your departure when you lived with friends.

You departed Australia in late 20XX.

Currently your intention is to remain in Country A.

You formed the intention to make your home indefinitely outside Australia some years ago as you and your spouse were expecting a child and wished to raise that child closer to your family in Country A.

You currently do not plan to return to Australia permanently. However, you are due to fly to City A for business twice a year in relation to your employment.

You have purchased a home in Country A.

Your only asset you have in Australia is a bank account into which your salary is paid (from where you transfer directly to the Country A).

In Country A your assets are:

•         a house

•         a flat that you rent out

•         a car

•         bank accounts.

You do not have a place to live in Australia. On your business visits to Australia, you stay with friends.

Before your departure, your household effects in Australia were sold privately or given away to friends.

You are currently employed by Company A although you conduct your duties in Country A. Due to the nature of your work you can work from anywhere in the world. You currently work out of your home office. You have no other position or job being held for you in Australia.

You have a spouse who accompanied you to Australia and back to Country A. You also have a child who was born in Australia but returned to Country A with you.

Your only social and sporting connection with Australia was membership of a sports club. You are no longer a member.

Your only social and sporting connection with Country A is membership of a club.

You have never been on the Australian electoral roll as you were not eligible to vote.

You do not have any investments with Australian financial institution or companies.

You have not informed Medicare of your departure from Australia although you cancelled your membership to your private health fund.

You submitted Country A tax returns all the years while in Australia.

You lodged a final Australian taxation return.

You do not recall what you stated as the reason for going overseas when completing the Australian Immigration Outgoing passenger card.

Neither you nor your spouse has ever been employed by the Australian Commonwealth government public service and neither belongs to any Commonwealth superannuation scheme such as CSS or PSS.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1)

Income Tax Assessment Act 1936 Subsection 6(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 not consistent with residing in Australia.

This is because:

•         You have travelled overseas to live and work for a considerable period.

•         Your family accompanied you overseas and now reside with you in a home you have purchased outside Australia.

•         You do not have access to any Australian property as you rented while living in Australia.

•         You have severed professional and social connections with Australia during your time overseas.

•         You and your family have established new social, professional and educational connections overseas.

You are not 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 parent 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 Country B and your domicile of origin is Country A. You also held a permanent residency visa of Australia, but this no longer allows you to enter Australia.

It is considered that you did abandon your domicile of origin in Country A and acquire a domicile of choice in Australia, however you reacquired you Domicile in Country A by returning and deciding to live there permanently.

You are not a resident of Australia under this test.

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 not been present in Australia for 183 days or more during the income years covered by this ruling.

You are not a resident under this test.

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.

You are not a resident under this test.

Conclusion

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the years covered by the ruling.

As a departed former resident of Australia, you will remain a non-resident unless the facts of your situation change or the applicable Australian law changes. You do not need to apply for a ruling in the future to be a non-resident unless your situation with respect to living in Australia changes.