Edited version of private advice

Authorisation Number: 1051896004231

Date of advice: 10 September 2021

Ruling

Subject: Residency

Question

Are you viewed as being a resident of Australia for taxation purposes during the period covered by this ruling under subsection 6(1) of the Income Tax Assessment Act 1936?

Answer

No.

This ruling applies for the following periods:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX.

The scheme commences on:

X January 20XX.

Relevant facts and circumstances

You were born in Australia and have Australian citizenship.

You travelled to several overseas countries, which included Country X, during your time there you became familiar and accustomed to what life there would be like.

You returned to Australia for a period of time.

You accepted an offer of employment in the position located in Country X.

You departed Australia in January 20XX to travel to Country X with the intention of residing overseas permanently.

You owned several investment properties; however, they were not available for you to use prior to you leaving for Country X. You decided not to purchase or rent a property for your exclusive use prior to leaving Australia and had resided at your parent's house in Australia for several months as a short-term guest prior to your departure to Country X.

Prior to your departure to Country X you sold your household effects, keeping sentimental items, such as photos, which you have left with your parents. You have taken some of your belongings with you to Country X.

Your employment contract is for an infinite period and does not have an end date, with your intention to continue your current employment during the period covered by this ruling.

Your employment includes the following conditions:

You have a residence provided by your employer which is available for your sole exclusive use in Country X where you keep your personal belongings and household effects. You have continued to reside at the same address since you moved to Country X, and it is your intention to remain living there in the future.

Your employment contract requires you to undertake your role in a specified region, or in any other place in Country X and you travel between several locations. When you travel to the different locations you stay in temporary guest accommodation provided by your employer and return to your residence in Country X after each trip.

You keep your personal belongings and household effects at the Country X residence.

You hold cryptocurrency and have an overseas bank account.

You have a gym membership and have made friendships through the Country X expat community and your work.

You have considered purchasing a vehicle in Country X however your employer had advised that due to general security concerns they recommended that you only use the work vehicle they have provided you.

You have and/or will obtain, the relevant visas and/or permits to enable you to live and work in Country X during the period covered by this ruling.

You did not return to Australia during the rest of the income year after you had travelled to Country X, nor the following income year. You spent a period of XXX days in Country X from the time you arrived there until the end of the following income year.

During the following income year you travelled to Australia to visit your family and friends over the Christmas and New Years Eve period, and after your quarantine you had stayed at a hotel for part of your period in Australia, with the remaining time spent at your parent's home. You stayed a total of XX days in Australia, which included the quarantine period.

You do not have any spouse or dependant/s.

You have sold both of your Australian investment properties, with settlement for one occurring shortly after you had departed for Country X, with the other property being leased long-term up until it was sold in the following year after you had commenced your employment in Country X.

You have maintained your membership to an Australian organisation work purposes as it offers relevant conferences, leadership events, online learning and industry news to build and accelerate careers in the industry you are employed in.

You were notified by the Australian Electoral Commission after you had departed Australia to commence your employment that as you had advised them that you were residing overseas indefinitely that you were not entitled to remain enrolled on the Australian Electoral Roll at the address in Australia you had been recorded as living at.

You have an Australian bank account and hold shares.

You had notified the Australian bank where you have a bank account that you had relocated overseas.

You suspended your Australian private health insurance policy around the time you departed Australia to commence your employment overseas.

You have never been a Commonwealth Government of Australia Eligible Employee.

You do not have any plans to return to Australia to reside during the ruling period and will continue to live overseas.

You intend coming to Australia during the ruling period to visit family and friends for a period/s that will total less than 183 days in each income.

Assumption

For the purpose of this ruling, it is assumed that your future actions will be consistent with the intentions described above.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

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

Reasons for decision

Resident of Australia for taxation purposes

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.

We have considered the above tests in relation to your situation as follows:

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 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.

Application to your situation

In your situation:

•         You are a citizen of Australia who departed Australia in 2020 to live and work in Country X where you have continued to live since departing Australia

•         You did not return to Australia during the 201-20 income year after your departure, but had returned to Australia for 90 days in the 2021-20 income year to visit your family and friends before returning to Country X

•         You do not intend on returning to Australia to live during the ruling period and will remain working overseas during the ruling period

•         You do not have a spouse or any dependant/s

•         You do not own any property in Australia and your personal and household effects are kept in your residence in Country X

•         You have an Australian bank account and hold shares; and

•         You have an overseas bank account and hold cryptocurrency.

It is viewed that you are a non-resident for tax purposes under the resides test during the ruling period

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.

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.

Application to your situation

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

You migrated to Country X in 2020 where you have continued to reside since then, holding the relevant visas and/or permits to enable you to work and reside there. You will continue to work and reside in Country X for the ruling period.

The Commissioner accepts that your permanent place of abode has changed and is in Country X during the ruling period. Therefore, you are not viewed as being a resident of Australia for taxation purposes during the period covered by this ruling 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.

Application to your situation

You have not been present in Australia for 183 days or more during any income year up to the present time. You do not intend spending a total of 183 days in Australia during any income year covered by this ruling. Additionally, it is viewed that your permanent place of abode is not in Australia.

Therefore, you are not viewed as being a resident of Australia for taxation purposes 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.

Application to your situation

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 of Australia for taxation purposes under this test.

Conclusion

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