Edited version of private advice

Authorisation Number: 1051902758613

Date of advice: 6 October 2021

Ruling

Subject: Residency - am I an Australian resident

Question

Are you a resident for Australian taxation purposes?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a citizen and resident from overseas.

You have an overseas passport.

You arrived in Australia on a special category visa.

You left Australia in 20XX and on the departure card you stated an overseas address and that you were permanently leaving Australia.

You left Australia for personal reasons.

You have no children and minimal family ties to Australia.

On returning overseas you did the following:

•                    you commenced new employment

•                    you opened a bank account

•                    you obtained a drivers licence, car registration and insurance

•                    you purchased new personal belongings

•                    you purchased a house with X% ownership interest

•                    you have lodged and reported tax returns in this country

You shipped your personal belongings overseas.

You are disposing of your interests in Australian assets.

You have the following connections to Australia:

•                    an ownership interest in X Australian properties

•                    bank account

•                    private health insurance

•                    income protection and life insurance; and

•                    Australian self- managed superannuation fund.

You have no intention to return to Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(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', in regard to 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' 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 were born overseas, and have returned to this country

•                    you returned overseas due to personal reasons

•                    you are disposing of your interest in Australian assets

•                    you have no family tying you to Australia

•                    you shipped your personal belongings overseas

•                    When you returned overseas you took all the necessary steps to re-establish yourself in your birth country

•                    you have been outside of Australia for more than X days

•                    you have no intention to return to Australia.

You are not a resident of Australia under the resides test.

In your case, you have established a permanent residency outside of Australia. The Commissioner is satisfied you are not an Australian resident for taxation purposes as defined in subsection 6(1) of the ITAA 1936 and have satisfied the resides test.

As you meet the principal test for establishing residency according to the ordinary concepts, you do not have to meet any of the additional tests and are therefore a non-resident of Australia for taxation purposes.