Edited version of private advice

Authorisation Number: 1051920066541

Date of advice: 12 November 2021

Ruling

Subject: Resident of Australia for taxation purposes

Question 1: Were you a resident of Australia for taxation purposes from the start date of the ruling period (Date 1) until the date you departed Country B (Date 2)?

Answer: No.

Question 2: Were you a resident of Australia for taxation purposes from the date you arrived in Australia (Date 3) until the end of the ruling period (Date 4)?

Answer: Yes.

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:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Australia and it is your country of origin.

You were offered a contract of employment to work for an organisation (Organisation X) located in Country A.

You applied for a visa to travel to Country A to enable you to work there in accordance with your employment contract, which was approved and issued to you.

You departed Australia to travel to Country A to commence your employment with Organisation X.

You stated that your reason for going overseas was 'Australian resident departing temporarily'.

Prior to departing Australia, you had lived with your parents at their property for many years. Any personal effects that you did not take with you overseas remained at your parent's property.

You were a paid member of a sporting club for several years prior to your departure but hadn't maintained your membership after you left Australia.

You advised the banks that you would be a foreign resident during the ruling period.

You did not advise the Australian Electoral Office that you were going overseas, nor had you notified Medicare to remove your name from its records

You commenced employment at Organisation A in accordance with your employment contract.

While you were in Country A you stayed in rental accommodation.

After several years your employment contract with Organisation X was extended for several months subject to you establishing your right to work and remain Country A and being able to produce the relevant documentation when requested.

You maintained the relevant visa and permit to enable you to continue your employment in Country A.

You were a member of sporting club during part of the period you were in Country A.

You went to Country B for a job interview with Organisation Y and were offered a position with the employment contract for a period of several years.

You applied for and were issued with the relevant visa to enable you to work in Country B.

During the period you were working in Country A you took several short trips to other countries for work and/or personal reasons in addition to a trip to Australia for a short period to visit family and friends.

Near the end of your employment contract with Organisation X you had travelled to Australia for a short period to visit your family and friends before travelling to Country B to commence your new employment with Organisation Y.

While you were in Australia your employment contract with Organisation X had ended.

You commenced your employment with Organisation Y in accordance with your employment contract.

While you were in Country B you lived in rented accommodation.

During the period you were working in Country B you took several short trips to other countries for work and/or personal reasons in addition to several trips to Australia for short periods to visit family and friends.

You maintained the relevant permits/visas to enable you to stay and work in Country B.

You had bank accounts with the Commonwealth Bank while you were overseas.

You filed tax returns in Country B in several years.

You travelled back to Australia close to the end of your employment contract with Organisation Y, with your employment contract ending during the following month.

You commenced employment with an Australian Government organisation (Organisation Z) during the month after your Organisation Y employment contract ended and are an Australian government employee.

Since your return to Australia, you have stayed at the following locations:

•                 Your parent's property for several months

•                 Rental accommodation for a short period; and

•                 Rental accommodation close to your employment where you continue to live until the present time.

Your Australian assets include furniture, banks accounts and investments. You had received dividends in relation to your shares while you were overseas.

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.

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.

Application to your situation

You departed Australia to commence your employment in the Country A prior to the start of the ruling period, Date 1, relocating to Country B after several years to continue your overseas employment. You returned to Australia after being in Country B for several years where you have remained until the present time.

We have considered the resides test in relation to your situation as follows:

Period - Date 1 to Date 2

During this period:

•                 you lived in rental accommodation in Country A and Country B respectively for the whole period, staying at the same address during your stay in each country

•                 you came to Australia on several occasions to visit your family and friends for short periods

•                 you were in Country A and Country B to enable you to undertake your employment in accordance with your employment contracts

•                 you took holiday trips and working trips to other countries, returning to the accommodation in each country in which you were employed

•                 you had not kept any Australian social, professional and/or religious connections while you were in either country; and

•                 you held limited assets in Australia during that period.

Given your limited connections to Australia and physical presence overseas in both countries from the start of the ruling period, Date 1, until you departed Country B, Date 2, you are viewed as being a non-resident for tax purposes under the resides test.

Period - Date 3 to Date 4

You departed Country B on Date 3 leaving your rental accommodation in Country B, arriving in Australia on Date 4.

You commenced your employment in Australia with Organisation Z several months after Date 3 and have remained in Australia since then, originally residing at your parent's property and then moving into rental accommodation located near your employment.

Your intention when you returned to Australia was to reside here. You did not have any strong ties remaining overseas and you have established your life in Australia after your arrival until the present time. Since your arrival you have displayed behaviour consistent with someone residing in Australia.

Therefore, from Date 3 to Date 4 you are viewed as being a resident of Australia for taxation purposes as the Commissioner does not accept that you had a permanent place of abode outside of Australia for that 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, such as 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

We have considered the resides test in relation to your situation as follows:

Period - Date 1 to Date 2

You are a citizen of Australia and it is your country of origin.

You had not abandoned your domicile in Australia, nor had you actively applied for, or been issued, a visa that would allow you to remain in either country indefinitely. You obtained visas that enabled you to stay in both countries so that you could work there in accordance with your employment contracts.

Therefore, you would be viewed as being a resident of Australia under the domicile test during this period unless the Commissioner is satisfied you had established a permanent place of abode outside of Australia.

You lived in rental/leased accommodation in both Country A and Country B, leaving your rental accommodation in Country B when you returned to Australia. Other than short periods to visit your family and friends in Australia and short work and personal trips to other countries, you had stayed at the same accommodation in each respective country for the duration of your stay in those countries.

The duration and continuity of your presence overseas in Country A and Country B supports the argument that you had lived there for the long-term, initially in Country A and then in Country B.

The Commissioner accepts that your permanent place of abode had changed and was in Country A and then Country B during the period from Date 1 to Date 2.

Period - Date 3 to Date 4

You departed Country B and arrived in Australia on Date 3 where you have remained until the present time.

Prior to leaving Country B you had lived in rental accommodation; with the exception of short periods when you had travelled to other countries for work and/or personal reasons.

Based on the information provided, it is viewed that you had not abandoned your domicile in Australia given that you only had a temporary visa to be in Country A and B and had not applied for a visa to enable you to stay in either country indefinitely.

As outlined above the Commissioner accepts that your permanent place of abode was in Country B prior to you returning to Australia. However, while you were in Country B long term, your accommodation was entirely work based and was dependent on your working there. Therefore, the Commissioner does not accept that your permanent place of abode from the date you arrived in Australia until Date 4 was overseas but was in Australia given that you had left your rented Country B accommodation.

As your domicile and your permanent place of abode was Australia from your arrival in Australia on Date 3 until the end of the ruling period on Date 4, you are viewed as being a resident of Australia for that period.

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

We have considered the resides test in relation to your situation as follows:

Period - Income years commencing on Date 1 and ending on 30 June 20XX in the income year prior to your return to Australia

You were not present in Australia for a total of 183 days or more during any income year in this period. It is viewed that your usual place of abode was overseas during this period, with you travelling to Australia and other countries for short periods for work and personal reasons.

Therefore, you are not a resident for this period under this test for the period 1 July 20XX to 30 June 20XX

Period - Income year in which you returned to Australia (being 1 July 20XX to Date 4)

You departed Country B and arrived in Australia on Date 3 being part way through this income year. You have remained in Australia from then until the present time, initially living at your parent's property before moving into more permanent accommodation located near your employment, which you commenced several months after Date 3.

You have effectively moved your life back to Australia obtaining employment, renting accommodation, and having furniture and household effects in Australia which supports that you have taken up residence in Australia where you continue to reside until the present time.

You were in Australia for more than 183 days during this period, being from Date 3 to Date 4.

As outlined above, from Date 3 the Commissioner is not satisfied you had a usual place of abode was outside Australia and that you had intended to take up residence in Australia.

Therefore, for the period in this income year before Date 3 you are not a resident for tax purposes under this test as the Commissioner is satisfied your usual place of abode was outside Australia.

However, for the part of this income year from the time you arrived in Australia on Date 3 until Date 4, you are viewed as being a resident of Australia 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.

This test will not apply if the individual is a member of the Public Sector Superannuation Accumulation Plan (PSSAP) and the test will only apply to members of the PSS and CSS which are now closed to new members.

Application to your situation

You were not a Commonwealth employee prior to commencing your Australian employment with Organisation Z. While you were a Commonwealth employee from that date, you are not a member of the schemes established by the legislation listed above, participating in schemes established in later years.

Therefore, as you were not a member of any relevant scheme as indicated above you are not a resident under this test for this period.

Conclusion

As outlined above:

•                 You are not viewed as being a resident of Australia for taxation purposes for the period commencing Date 1 until Date 2 as the Commissioner accepts that your permanent place of abode was outside of Australia during that period; and

•                 You are viewed as being a resident of Australia for taxation purposes from Date 3 until Date 4 as the Commissioner does not accept that you had a permanent place of abode outside of Australia after you had left your accommodation in Country B. Your intention when you arrived was to live in Australia, which you have continued to do until the present time, establishing your life in Australia.