Edited version of private advice

Authorisation Number: 1051949125561

Date of advice: 15 February 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes since departing Australia in January 20YY to live and work in Country A and subsequently Country B?

Answer

No

This ruling applies for the following period:

Year ended 30 June 20YY

The scheme commences on:

1 January 20YY

Relevant facts and circumstances

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

You have not been granted permanent residency in another country.

Prior to leaving Australia, you and your family were living in your own home in Australia.

Now that you have left Australia, you have been renting out what was previously your family home.

In early 20YY you moved to Country A, with your family departing Australia to join you on early 20YY. You relocated to Country A for work purposes, having been offered and accepting a long-term placement with your employer.

You held a visa issued by Country A for the duration of your employment placement in that country. Your family held dependant visas. These allowed you entry and exit to and from Country A on multiple occasions.

You were expected to remain in Country A for more than two years and you were provided with accommodation by your employer.

You are currently a tax resident of Country A.

Your position with your employer has since changed. As a result of corporate re-organisation, you were re-deployed from Country A to Country B for a number of years in early 20YY.

During the transition between your former and pending employment role, you have sourced accommodation for your family to live with you in Country B.

You took a personally funded long-term lease on a suitable property which will be your family home in Country B.

You have a general employment visa issued by the relevant authority in Country B for the duration of your employment in that country. This visa allows multiple entry and exit into and from Country B as required. This visa allows you to remain permanently in Country B. Your family hold dependant visas.

Your family returned to Australia from Country A for in mid-20YY. Your family will stay with relatives and your children will temporarily attend school in Australia.

Both of your children are enrolled in a school in Country B.

You visited your family in Australia over the 20YY Christmas and 20YY New Year period, after which the entire family expected to move to Country B and commence living there. The purpose of this trip was visiting family and friends, as well as assisting with your spouse and children's preparations for moving to Country B. You were not undertaking work or business matters.

You own a family home in Australia, where you lived prior to relocating to Country A. This property has been continuously rented out to a third party since you moved overseas. Whilst you own a property in Australia, you do not have any right of access. This has not been your permanent abode for a number of years and you did not return to the property during your visits to Australia in 20YY and 20YY.

You and your spouse own a share of a separate property in Australia.

You have an active Australian bank account for management of the rental income of these properties.

You have personal equipment in storage in Australia.

You are not a member of any Commonwealth Government Superannuation Scheme.

Since 20YY, you have spent approximately X weeks in Australia over X separate visits. You do not have an ongoing physical presence in Australia.

You formed the intention to make your home outside Australia when you accepted the employment roles in Country A and Country B. You and your family relocated overseas. Following the completion of your placement in Country B (expected 20YY) you will assess your options; you do not have any fixed residency intentions at this time.

You completed the 'Reason for going overseas' question on the Australian Immigration Outgoing passenger card as 'Leaving permanently' when leaving for Country A. You will advise 'Leaving permanently' when you relocate to Country B with your family in 20YY.

You do not hold return airlines tickets to Australia.

You relocated most of your personal belongings and furniture to Country A when you commenced your employment overseas. These have now been relocated to your accommodation in Country B.

You have an active overseas bank account.

You do not have a position being held for you in Australia. Your current contract notes that a role within the broader employer group will be found (if the current role in Country B is not extended).

You have friends and family living in Australia.

In Country A you were integrated into the expat community and had social ties through the international school your children attended. You also had social connections.

In Country B you have social connections with co-workers and members of the expat community.

You have notified the Australian Electoral Commission of your relocations overseas, as well as your Australian financial institutions.

You have notified Medicare of your relocation to Country B.

You had been lodging Income Tax Returns in Country A.

You have not been present in Australia for 183 days or more during the 20YY income year.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 6-5

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, 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.

In your situation, you moved to Country A, with your family departing Australia to join you. You relocated to Country A for work purposes, having been offered and accepting a long-term placement with your employer.

You held a visa issued by Country A for the duration of your employment placement in that country. Your family held dependant visas. These allowed you entry and exit to and from Country A on multiple occasions.

During this time, you planned to remain in Country A for a number of years and you were provided with accommodation by your employer.

While your position with your employer has since changed, you were redeployed to Country B in early 20YY.

During the transition between your former and pending employment role, you have sourced accommodation for your family to live with you in Country B.

You took a personally funded long-term lease on a suitable property which will be your family home in Country B.

You have a general employment visa issued by the relevant authority in Country B for the duration of your employment in that country. This visa allows multiple entry and exit into and from Country B as required. This visa allows you to remain permanently in Country B. Your family hold dependant visas.

Your spouse and children returned to Australia from Country A they will return to Country B and your children are enrolled in a school in Country B.

You own a home in Australia, where you lived prior to relocating to Country A. This property has been continuously rented out to a third party since you moved overseas. Whilst you own a property in Australia, you do not have any right of access. This have not been your permanent abode for a number of years and you did not return to the property during your visits to Australia in 20YY and 20YY.

You relocated most of your personal belongings and furniture to Country A when you commenced your employment overseas. These have now been relocated to your accommodation in Country B. You have also placed some items in storage as you were unable to take them with you when you departed.

You have an active Australian bank account for management of the rental income of these properties.

Since departing you have only returned to Australia for short periods to visit family.

You completed the 'Reason for going overseas' question on the Australian Immigration Outgoing passenger card as 'Leaving permanently' when leaving for Country A. You will advise 'Leaving permanently' when you relocate to Country B with your family in 20YY.

You do not hold return airlines tickets to Australia.

You relocated most of your personal belongings and furniture to Country A when you commenced your employment overseas. These have now been relocated to your accommodation in Country B.

You have an active overseas bank account.

You do not have a position being held for you in Australia. Your current contract notes that a role within the broader employer group will be found (if the current role in Country B is not extended).

While in Country A, you were integrated into the expat community and had social ties through the international school your children attended. You also had social connections.

In Country B you have social connections with co-workers and members of the expat community.

You have notified the Australian Electoral Commission of your relocations overseas, as well as your Australian financial institutions and have been lodging income tax returns in Country A.

We consider that your circumstances are not consistent with residing in Australia.

This is because:

•                    Your intention was to leave Australia permanently and relocate to Country A to live and work with your family accompanying you. You remained in that country for a number of years. Due to an opportunity with your employer, you accepted a long-term position and relocated to Country B. Your intention is to live and work on a permanent basis in Country B and your family will live with you for a number of years.

•                    You took a personally funded long-term lease on a suitable property which will be your family home in Country B.

•                    You relocated most of your personal belongings and furniture to Country A when you commenced your employment overseas. These have now been relocated to your accommodation in Country B.

•                    You have notified relevant institutions of your relocation 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 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.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country A or subsequently in Country B. You were not entitled to reside in Country A or Country B indefinitely and while living in Country A and Country B, you only held a work permit which was valid for a number of years.

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 left Australia in some years ago to relocate to Country A for ongoing employment. You commenced an overseas placement with your employer, who provided you with leased accommodation.

You lodged annual Income Tax Returns when living in Country A.

You have now relocated to Country B to commence in another role for your employer. You intend to remain there for a number of years.

You have personally rented an apartment in Country B for you and your family's exclusive use.

Your family relocated overseas to live with you in Country A and will move to Country B to live with you as well. You will be establishing your home there with your children enrolled to attend school in Country B.

The majority of your possessions and belongings were shipped to Country A and then to Country B for your use and some placed in storage.

You notified the Australian Electoral Commission, Medicare and your Australian financial institutions that you departed Australia when you left for Country A.

Your intention was to leave Australia to permanently live and work in Country A in 20YY. Due to your employer group's re-organisation and your subsequent re-assignment, your intention is to relocate and then live and work in Country B.

You own a house in Australia which you have been renting out since moving to Country A. You have no right of access to this property when you visit Australia.

Therefore, 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 year. 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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes since departing Australia.