Edited version of private advice

Authorisation Number: 1051969455497

Date of advice: 6 April 2022

Ruling

Subject: Resident of Australia for taxation purposes

Question 1:

Are you viewed as being a non-resident of Australia for taxation purposes Period 1 under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer:

Yes. The Commissioner is satisfied that your permanent place of abode during this period was in Country X.

Question 2:

Are you viewed as being a non-resident of Australia for taxation purposes during Period 2 under subsection 6(1) of the ITAA 1936?

Answer:

Yes. The Commissioner is satisfied that your permanent place of abode during this period was in Country Z.

This ruling applies for the following periods:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

The scheme commences on:

1 July 20XX.

Relevant facts and circumstances

You were born in Australia and have Australian citizenship.

While you were employed by Company A you were asked to relocate to their operations in Country X.

Prior to departing Australia, you had resided in accommodation provided by Company A.

You departed Australia to commence a X-year contract with Company B, which could be rolled over every X years.

Your personal possessions not taken to Country X were put into a storage shed in Australia and continue to be kept there until the present time.

The position in Country X provided you with an opportunity to develop professionally, and it was your intention to start working in Country X and once happy with the working conditions and personnel onsite and to stay residing in Country X.

It was a requirement under Company B policy that you held a return airline ticket for employee safety reasons so that you could be evacuated quickly in the event of civil unrest, or emergency medical reasons.

After several months you decided to stay working in Country X for Company B indefinitely.

You obtained and maintained the necessary visas to enable you to stay in Country X to work for Company B.

During your employment in Country X, you lived in accommodation provided by your employer where you kept your personal possessions.

You returned to Australia for short periods on several occasions for the purpose of visiting your family and travelled for short periods for work and/or private purposes.

While you were in Country X you were a member of a sporting club, having social interactions with staff from Company B. You did not have a licence, bank account or any other assets in Country X with the exception of a mobile SIM and phone number.

Your employment with Company B ended on Date 2, being several years after you travelled to Country X.

Your belongings in your room provided by Company B were collected and boxed up on Date 2.

You returned to Australia and were a resident of Australia from Date 2 until the date you departed for Country Z to commence your employment contract with Company C.

You moved into accommodation provided by Company C on Date 3 where you keep your personal possessions. You maintain a garden area, and there is an outdoor entertainment area where you socialise, in addition to going to a bar area with other employees to participate in quiz nights on a weekly basis. You support a sporting team of Company C regularly in relation to their matches/games.

It was a requirement under Company C policy that you held a return airline ticket for employee safety reasons so that you could be evacuated quickly in the event that civil unrest, or emergency medical reasons.

You continue to work for Company C until the present time with your contract having been extended. You obtained and maintained the necessary visas to enable you to stay in Country Z to work for Company C and have not been granted permanent residency in Country Z.

You returned to Australia on several occasions for short periods during your employment with Company C to visit your family, returning to Country Z after each visit.

During the ruling period you held the following in Australia:

•                a drivers' licence

•                a bank account and several credit cards

•                membership with the Australasian organisation relevant to your employment field; and

•                shares.

During the ruling period you did not have any of the following in Australia:

•                social or sporting affiliations with Australia

•                a car

•                any houses; or

•                any business/es.

You did not have a spouse or any dependant/s during the ruling period.

You did not advise/notify:

•                any Australian financial institutions to deduct withholding tax as you were not aware of this requirement

•                any Australian companies with whom you have investments that you were a foreign resident during your periods of overseas employment

•                the Australian Electoral Commission to remove your name from the electoral role during the periods of any of your overseas employment; or

•                Medicare to have your name removed from their records during the periods you were overseas but had not used Medicare during the period of any of your overseas employment.

You advised your health insurance provider to cease your cover as your employer would cover your international health insurance needs.

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.

You did not lodge any tax returns in any other countries during the ruling period.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

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

Reasons for decision

Resident of Australia for taxation purposes

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.

We have considered the above tests in relation to your situation when determining whether you were a resident of Australia during the periods XX Month 20XX to XX Month 20XX and XX Month 20XX to XX Month 20XX as follows:

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 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.

Application to your situation

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

We have considered the resides test in relation to the periods the ruling is being sought as follows:

First Period - Period commencing at the start of the ruling period (Date 1) until the date your employment with Company B ended (Date 2), being a period of several months

•                You departed Australia several years before the start of the ruling period to start your employment in Country X, with your employment ending on Date 2, maintaining the relevant visas to enable you continue your employment there

•                You stayed in accommodation provided by your employer, staying at the same address during the duration of your employment, with your personal items being removed from the room on Date 2

•                You returned to Australia to attend several conferences for short periods, travelled within Country X for work purposes and had a private trip for a short period in another country

•                You held limited assets in Australia during this period and had not kept any Australian social, professional and/or religious connection while in Country X except for membership with an organisation relevant to employment in your field; and

•                You did not have a spouse or any dependant/s during this period.

Second period - Period commencing on the date you moved into the accommodation provided by Company C (Date 3) until the end of the ruling period (Date 4), being a period of several years

•                You departed Australia to commence your employment contract with Company C for a X-year period, and with whom you are still employed until the present time

•                You moved into the accommodation provided by Company C on Date 3, where you lived for the rest of the ruling period, and continue to live until the present time

•                You travelled to Australia for X short periods for family reasons, returning to Country C

•                You held limited assets in Australia during this period and had not kept any Australian social, professional and/or religious connection while in Country Y, except for membership with an organisation relevant to employment in your field; and

•                You did not have a spouse or any dependant/s during this period.

Conclusion:

Given your limited connections to Australia and physical presence overseas in both Country X during Period 1 and Country Z during Period 2, you are viewed as being a non-resident for tax purposes during those periods 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.

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, such as 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.

Application to your situation

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

You have not abandoned your domicile in Australia, nor had/have you actively applied for, or been issued a visa that would allow you to remain in either Country X or Country Z indefinitely.

You obtained visas that enabled you to stay in both countries so that you could work there in accordance with your employment contracts in each respective country but had not chosen to migrate to either country.

Therefore, you would be viewed as being a resident of Australia under the domicile test during this period unless the Commissioner is satisfied you had established a permanent place of abode outside of Australia.

You lived in accommodation provided by your employers in both countries. Other than short periods when you had travelled away from your accommodation, you stayed at the same accommodation in each respective country for the duration of your employment in those countries, continuing to remain in the same accommodation in Country Z after the ruling period.

You stayed in Country X for several years while you were employed by Company B. and have been in Country Z for several years since you commenced your employment with Company C. The duration and continuity of your presence overseas in Country X and Country Y during the 2 periods considered in this ruling supports the argument that you had lived there for the long-term.

The Commissioner accepts that your permanent place of abode had changed and was overseas in:

•                Country X during Period 1; and

•                Country Y during Period 2.

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.

Application to your situation

You have travelled to Australia on several occasions for short periods during the 2 periods considered in this ruling but were not present in Australia for 183 days or more during any income year covered by the ruling period.

Therefore, you are not viewed as being a resident of Australia for taxation purposes 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.

Application to your situation

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 of Australia for taxation purposes under this test.

Conclusion

As you did not satisfy the Superannuation Test, the 183-day Test and the Resides Test, and the Commissioner is satisfied you had established a permanent place of abode outside Australia during Period 1 and Period 2, you are not viewed as being a resident of Australia for taxation purposes during those periods.