Edited version of private advice

Authorisation Number: 1051956603369

Date of advice: 17 May 2022

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for income tax purposes from XXXX to XXXX?

Answer 1

No.

Question 2

Are you a resident of Australia for income tax purposes from XXXX?

Answer 2

Yes.

This ruling applies for the following period:

Year ended 30 June 2021

Year ending 30 June 2022

The scheme commences on:

1 July 2020

Relevant facts and circumstances

You are an Australian citizen by birth.

In XXXX you moved from Australia to another country.

Since XXXX you established a home overseas, attended University, established a business in the another country, married a citizen from overseas and have developed strong professional and social ties in the other country.

You became a citizen of the other country in XXXX choosing to retain your Australian citizenship.

Since moving overseas you have returned to Australia to visit parents and siblings.

You do not own a home overseas and have lived in long term rental accommodation since XXXX.

Your spouse had their work cancelled in XXXX due to the COVID-19 pandemic.

With your spouse not working, your lease coming to an end and the pandemic heavily impacting day to day life overseas, you choose this time to visit Australia staying with your family members in Australia before returning overseas to stay with your spouse's family.

You and your spouse arrived in Sydney on XXXX and spent two weeks in hotel quarantine.

Whilst in Australia you have received foreign sourced income from your foreign based company. Those earnings are deposited into a foreign account and you use foreign credit cards to pay for everything in Australia.

Between XXXX and XXXX you and your spouse stayed with various family and friends, Air BnB apartments and in a short term rental in Sydney.

On XXXX you purchased a property to use for accommodation when returning to Australia.

You have no intention of renting the property for income and will leave it unoccupied when you leave Australia to return overseas.

As you intended to leave Australia in XXXX the apartment settlement period was extended on request to allow sufficient time to organise the necessary paperwork after returning overseas on XXXX.

On XXXX you were diagnosed with an illness.

Subsequent to the diagnosis, you chose to stay in Australia for treatment for the estimated treatment time of 6 to 12 months.

Remaining in Australia allowed you to receive support from family members during your treatment.

You are not entitled to coverage from Medicare.

On XXXX you moved into the property as you had no accommodation arranged for after XXXX when you were booked to leave Australia and return overseas.

Your return flights overseas were cancelled on XXXX.

Your spouse returned overseas on the XXXX.

You began treatment for your illness and intended to return overseas on XXXX pending the outcome of your follow up appointment.

You were advised at the follow up appointment in XXXX that your illness persisted.

You had surgery on XXXX.

You subsequently begun further medical treatment on XXXX and will continue until XXXX.

You intend to return overseas as soon as you have recovered your health.

Relevant legislative provisions

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

Income Tax Assessment Act 1936 Subsection 6(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 ITAA 1936.

The terms resident and resident of Australia, as applied to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (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.

For the period XXXX to XXXX - you were not residing in Australia according to ordinary concepts as the Commissioner accepts that you had strong connections to another country during that time and only temporary connections to Australia.

We consider that your circumstances are consistent with residing in Australia from XXXX, when you moved into the property you purchased.

We understand your intention is to return overseas when your medical condition has improved and that you have retained ties to another country. However, on the balance, your circumstances demonstrate that you are residing in Australia according to the ordinary meaning of the word.

In particular, your family ties in Australia, your intention to remain in Australia until the medical issues are resolved, ceasing the lease on the property overseas with the intention of seeking new accommodation upon your return, and your physical presence in Australia, all point to you residing in Australia.

We balanced these circumstances against your foreign based employment that you have been performing remotely, your intention to remain in Australia for the period it took to resolve your medical issues and that it has always been your intention to return overseas when the issues are resolved. It is not a requirement of the resides test that the intention to reside in Australia be permanent, or that all ties be severed.

While you do not intend on being Australia permanently, you have established a settled presence in Australia during the relevant period. Your connections to another country were not strong during that time and you didn't not have specific property you were holding onto overseas.

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

You are a resident of Australia under the resides test from XXXX.

Although the resides test is the primary test, we have discussed the other tests and how they would apply to your circumstances, below.

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.

In your case, you were born in Australia and your domicile of origin is Australia. You left Australia in XXXX and have since only returned for short holidays.

You have stated that your intention is to remain living overseas indefinitely and you obtained foreign citizenship in XXXX.

You are married to a foreign citizen and have been living and working in another country.

It is considered that you did abandon your domicile of origin in Australia and acquired a domicile of choice in another country.

You have also stated that upon arrival in Australia, up until the XXXX, it was always your intention to return to your life overseas upon the completion of your visit to Australia and subject to COVID restrictions. It is considered that you have not abandoned your domicile of choice in another country.

You are not a resident of Australia under the domicile test outlined in the definition of 'resident' in subsection 6(1) of the ITAA 1936.

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. This test enables the Commissioner to consider usual place of abode and intention to take up residence in Australia, so that individuals who are enjoying an extended holiday in Australia are not treated as residents.

You have been present in Australia for 183 days or more in the XXXX and XXXX income years, since your arrival in Australia in XXXX. We now need to consider whether we are satisfied that, during the XXXX and XXXX income years, your usual place of abode was outside Australia and whether your intention was to take up residence in Australia.

In the context of the 183-day test, a person's usual place of abode can include both a dwelling or a country where the person usually resides. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, it is necessary to examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode (Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836).

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts.

For the period from XXXX to XXXX, the Commissioner is satisfied your usual place of abode was another cuntry during this time as your connections to Australia were temporary as evidenced by the temporary accommodation you were in.

The Commissioner is also satisfied that your you did not intend to reside in Australia during this period and can accept your stated intention.

From XXXX onwards, the Commissioner is not satisfied that your usual place of abode was outside Australia and that you did not intend to reside in Australia for the relevant period.

In respect of the usual place of abode we took the following into account:

•                You left Australia in XXXX and lived and worked overseas, obtaining foreign citizenship, and only making brief visits to Australia

•                You had organised a holiday over the period of XXXX to XXXX intending to return overseas after XXXX with a return ticket booked for the XXXX.

•                When you left the foreign country, you ceased your lease on your apartment intending to stay with your spouse's family when returning.

•                On XXXX you purchased a property to use for accommodation when returning to Australia.

•                You have no intention of renting the property for income and intend to leave it unoccupied when you leave Australia to return overseas.

•                As you intended to leave Australia in XXXX the property settlement period was extended on request to XXXX to allow sufficient time to organise the necessary paperwork after returning overseas on XXXX.

•                On XXXX you were diagnosed with a medical condition.

•                You intended to remain in Australia to receive medical treatment whilst receiving the support of your family in Australia and return overseas after treatment was successful.

•                On XXXX, your spouse returned overseas.

•                You remained in Australia for a follow up medical appointment on XXXX and on the basis that the medical appointment goes well you intended to return to the foreign country.

•                The appointment on XXXX you were advised that the medical condition has relapsed and you subquality required further treatment,

•                You intend to return overseas as soon as you receive a clear follow up scan.

While your intention is to return overseas, during the period of the ruling you established a settled presence in Australia. While the meaning abode can refer to a country and does need to be a specific property, you did not have a strong presence overseas during this period based on your support being here and you not having available accommodation in another country.

The Commissioner is not satisfied that your usual place of abode was outside Australia for the ruling period.

In respect of the intention to take up residency in Australia we considered that:

While your stated intention was to return overseas, this has not occurred during the ruling period. In forming the relevant state of satisfaction, the Commissioner has to take into account not only stated intention but also the objective facts. The objective facts including your physical presence, your support system being here and your reduced connection to another country during the relevant period mean that the Commissioner cannot be satisfied that you did not intend to take up residence.

The Commissioner is not satisfied that you did not intend to take up residency in Australia for the period of the ruling.

You are not a resident under this test from XXXX to XXXX.

Based on the information provided, you are a resident under this test from XXXX.

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.

Based on the information provided You are not a resident under this test.

Conclusion

You are not a resident of Australia for income tax purposes for the period from XXXXX to XXXX.

You are a resident of Australia for income tax purposes from XXXX as you meet the 'resides' test and the 183-day test.