Edited version of private advice

Authorisation Number: 1051964767241

Date of advice: 25 March 2022

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes for the 2021 income year?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2021

The scheme commences on:

1 July 2020

Relevant facts and circumstances

You were born in Country Y.

You are a citizen of Country Y.

You and your spouse came to Australia on tourist visas on XXXX 2019.

You are living with your child in Australia.

Two of your children have immigrated to Australia and are Australian citizens, one of your children has immigrated to Country Z and you have no family left in Country B.

You and your spouse intend on living permanently in Australia.

You do not intend on returning to Country B to live.

In March 2020 when the borders closed you were not able to leave Australia to apply for permanent residency.

You applied on shore for an Aged Parent (Residence) (Class BP) Aged Parent (subclass 804) visa.

Your permanent resident visa was applied for on XXXX 2020.

You have been granted a bridging visa class C, which allows you to remain in Australia until 35 calendar days after a decision is made on your permanent residency application.

You are retired and do not have an income source in Country Y.

You are financially reliant on your child.

You own your home in Country Y and this home is vacant while you are in Australia.

You will sell the home in Country Y once your permanent residency visa has been granted and live off the money.

You have opened a bank account in Australia.

You do not have any assets in Australia.

You do not have any other assets in Country Y other than your home.

You are starting to form strong social networks in Australia.

Neither you nor your spouse are eligible to contribute to the PSS or the CSS commonwealth super funds.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 995-1

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. 3rd 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 Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia 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 according to ordinary concepts.

This is evident from the following:

•                You and your spouse came to Australia

•                You and your spouse have been living with your child in Australia

•                Your child financially supports you

•                You intend on remaining permanently in Australia

•                You have applied for permanent residency of Australia

•                You have opened a bank account in Australia

•                You have started to make friends and social networks in Australia

•                You intend on selling your home in Country Y

•                Your home in Country Y is vacant

The Commissioner is satisfied that you are living in Australia according to ordinary concepts.

You are a resident under this 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 country Y and are a citizen of Country Y.

You have applied for permanent residency of Australia but this has not been granted yet.

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 were in Australia for more than 183days in the 2021 income year.

You intend on taking up residency in Australia as you have applied for permanent residency.

Your usual place of abode is not outside Australia as you do not intend on returning to live in Country Y and you will sell your home in Country Y once you have permanent residency of Australia.

You are 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 and your spouse 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.

You are not a resident under this test.

Conclusion

You are a resident of Australia for taxation purposes for the 2021 income year.