Edited version of private advice

Authorisation Number: 1051929579014

Date of advice: 17 January 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes for the relevant period?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You are not a permanent resident of any other country.

You first went overseas a number of years ago to work and you have lived in various countries since then.

You have worked in a number of countries.

You have had a number of overseas visas.

The visas allow you to be in the country for the duration of your work.

You were in Australia for several months due to your overseas office being closed because of COVID and commercial flights being suspended in and out of the relevant country. Charter flights were arranged to evacuate staff and you were made to return to your country of origin until the situation stabilised.

You stayed with your parents while in Australia during this period.

Once issued, your new Country Z Visa will entitle you to live and work in Country Z, initially for a few months period, and then after arrival, it will be extended for a period of X, renewable.

Your previous visas for Country Y allowed you to live and work for a period of X.

Your previous visas for Country Z allowed you to work and live for a period of X.

You have been working remotely on the Country Z response from Country X. You expect to be able to enter Country Z soon.

You previously worked in Country Y for a X years and before that in Country Z for X years. You were in Country A for a year before that.

You will be in Country Z for X years.

You have rented accommodation where you have been working.

You will live in Country Z.

In Country Y, you lived in a compound.

When previously in Country Z you lived in a number of rental houses.

You will live on your own in Country Z.

Once you arrive in Country Z all of your personal belongings will be delivered there from Country Y including bedding, kitchen and household items, clothing, artwork, photographs. Your shipment is currently stuck at the overseas airport pending the resumption of international commercial flights. You have suitcases of belongings overseas.

You do not have a spouse.

You do not have any dependants.

You have a rental property in Australia along with a bank account and superannuation funds.

You do not intend on returning to Australia to live.

You will return to Australia for visits and will not exceed 183 days in Australia.

You generally visit Australia for a couple of weeks or so to visit family.

You are not eligible to contribute to the PSS or the CSS Commonwealth super funds.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Superannuation Act 1976

Superannuation Act 1990

Reasons for decision

Detailed reasoning

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 consistent with you not residing in Australia.

You have been living and working outside Australia for several years.

You have worked in multiple countries.

In these countries you have lived in accommodation which is for your sole use.

You have taken all of your belongings overseas with you.

You returned to Australia a couple of years ago due to the pandemic and you left to return to your work overseas later in the same year.

While in Australia you stayed with your parents.

The Commissioner is satisfied that you are not residing in Australia according to ordinary concepts.

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.

You were born in Australia and you are a citizen of Australia.

You have not taken any steps to change your domicile.

You are a resident under this test.

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.

The Commissioner is satisfied that your permanent place of abode is outside Australia. This takes into account that:

·                    you have lived and worked overseas for several years

·                    you took all your belongings overseas with you

·                    you permanently lived and worked in Country Z for a few years and rented accommodation in Country Z for this period

·                    the accommodation in Country Z was for your sole use and you paid all associated costs

·                    you permanently lived and worked in Country Y for a few years and rented accommodation in Country Y for this period

·                    the accommodation in Country Y was for your sole use and you paid all associated costs

·                    you intend to permanently reside is in Country Z in line with your employment for several years

·                    you will rent accommodation in Country Z which will be for your sole use and you will pay all of the costs associated with the accommodation in Country Z

·                    you only return to Australia for short visits

·                    you do not intend on living in Australia again

You are not a resident 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 in Australia for more than 183 days during the relevant period.

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. Therefore, you are not a resident under this test.

Conclusion

You are not a resident of Australia for taxation purposes for the relevant period.

You are not required to declare your foreign sourced income in your Australian tax return.

You are only required to declare your Australian sourced income in an Australian tax return. Your Australian sourced income will be taxed at non-resident rates.