Edited version of private advice

Authorisation Number: 1051962040929

Date of advice: 5 April 2022

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for income tax purposes from the date you arrived in Australia for the year ended 30 June 20XX?

Answer

No.

Question 2

Are you a resident of Australia for income tax purposes from 1 July 20XX until and including XXXX?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

XX Month 20XX

Relevant facts and circumstances

You were born in Australia and have Australian Citizenship.

On XXXX you departed Australia with the intention to reside permanently overseas taking all your personal belongings with you.

You resided overseas from XXXX to XXXX.

The last XX years you spent living exclusively in Country B.

On XXXX you arrived in Australia with a return ticket booked for XXXX.

You came to Australia for medical treatment.

It was recommended by your medical professionals to travel to Australia for treatment.

You also felt more comfortable choosing a country for treatment where English was the primary language avoiding any possible communication issues.

When you arrived in Australia you stayed with family.

Due to your prolonged absence from Australia, you no longer had access to the Medicare system or Australian Private Health Insurance.

Your medical treatment in Australia was paid with your insurance policy.

Your return flight on XXXX was rescheduled to XXXX due to your health.

Due to prolonged poor health your return flight for XXXX was rescheduled to XXXX.

The flight on XXXX was cancelled by the airline as the country closed its international borders due to the COVID-19 pandemic.

You kept your rental accommodation in the other Australia and renewed the lease whilst in Australia.

You have communicated with your foreign employer updating them on your health status.

In XXXX your employer was able to extend your work Visa until 20XX however they were not able to arrange for your residence Visa to be extended without you being physically in the country.

On XXXX your foreign employment was terminated.

Upon termination of your employment your rental lease was also terminated. You arranged for friends in Country B to pack and ship your belongings to Australia, and the keys to the accommodation were returned on XXXX.

Whilst in Australia you have not earned Australian sourced income.

In XXXX you purchased a property in Australia which you now live in as your main residence.

You have self-assessed as a resident of Australian for taxation purposes from XXXX.

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 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 not consistent with residing in Australia.

This is because:

You travelled to Australia for Medical treatment. You intended to return home to Country B as soon as you were well enough to travel. This intention is evidenced by the multiple return flight tickets to Country B you have purchased. Whilst in Australia you stayed with family and left all your belongings in your rental accommodation in Country B. Your employer continued to pay rent for your Country B's accommodation and renewed the lease whilst you were in Australia.

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.

In your case, you were born in XXXX and your domicile of origin is Australia.

It is considered that you abandoned your domicile of origin in XXXX and later acquired a domicile of choice in Country B. You were not entitled to reside in Country B indefinitely and while living in Country B, you only held a work permit which was valid until XXXX. As you intended to return to Country B, in XXXX your employer applied and was successful in extending your work visa until 20XX.

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:

When you departed Australia in XXXX you took all your personal belongings with you. Whilst in Australia for medical treatment you have stayed with family and left all your belongings in your rental accommodation in Country B. Your employer continued to pay rent for Country B's accommodation and renewed the lease whilst you were in Australia. Only after your employment was terminated and it was clear that you were not returning to Country B, you had friends in Country B pack up your belongings and shipped them to Australia. In XXXX you purchased a property in Australia and live in it as your main residence.

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 been in Australia for 183 days or more in the 20XX and 20XX income years. We now need to consider whether we are satisfied that, during those income years, your usual place of abode was outside Australia and you did not intend to take up residence in Australia.

Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia and that you did not intend to reside in Australia until you vacated your rental accommodation in Country B on XXXX.

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

In respect of the usual place of abode this takes into account that:

When you departed Australia in XXXX you took all your personal belongings with you. Whilst in Australia for medical treatment you have stayed with family and left all your belongings in your rental accommodation in Country B. Your employer continued to pay rent for your Country B accommodation and renewed the lease whilst you were in Australia. Only after your employment was terminated and it was clear that you were not returning to Country B, you had friends in Country B pack up your belongings and shipped them to Australia. In XXXX you purchased a property in Australia and live in it as your main residence.

In respect of the intention to take up usual place of abode this takes into account that:

You travelled to Australia for medical treatment. You intended to return to Country B as soon as you were well enough to travel. This intention is evidenced by the multiple return flight tickets to Country B you have purchased. Whilst in Australia you stayed with family and left all your belongings in your rental accommodation in Country B. Your employer continued to pay rent for your Country B's accommodation and renewed the lease whilst you were in Australia.

While living in Country B, you only held a work permit which was valid until XXXX. As you intended to return to Country B, in XXXX, your employer applied and was successful in extending your work visa until 20XX.

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 for the year ended 20XX.

For the year ended 30 June 20XX, you are not a resident of Australia for the period 1 July 20XX to XXXX.