Edited version of private advice

Authorisation Number: 1051971067192

Date of advice: 12 April 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Country Z.

You are a citizen of both Country Z and Australia.

You left Australia and went to Country Y in a prior year.

Your spouse and children joined you in Country Y a few weeks later.

You have employment with an educational facility of Country Y.

This contract is for a few years and can be extended for several more years.

You have a work permit to be in Country Y and your spouse and children have a Country Y dependant permits.

You have kept your family home in Australia available for your use as your employer will require you to return to Australia for a number days each year for work purposes.

You are renting an apartment in Country Y.

The apartment is for you and your family's sole use.

You pay all of the costs associated with the rental of this apartment.

You and your family have purchased items for the apartment in Country Y.

Your spouse arranged for the sale of your vehicles in Australia and the freighting of belongings to Country Y.

Your spouse cancelled your mobile and broadband accounts in Australia.

You have hired a gardener to take care of your Australian property.

A colleague may commence housesitting in lieu of rent.

Your long-term intention is to sell the home in Australia once it has appreciated.

You do not intend on relocating back to Australia in the foreseeable future.

You relocated your pet to Country Y.

You have the following assets in Country Y:

•         Bank accounts

•         Furnishings

•         Lease on a motor vehicle with the intention of purchasing a motor vehicle in Country Y in the future.

•         Share investments

Assets in Australia:

•         Family home

•         Bank account

You are employed by a xxxx in Australia.

Your role at this xxxx is not a full-time role nor do you have fixed hours.

Your remuneration is based on completing specific duties. The contract states that the work can be performed remotely in Country Y or when visiting Australia. This is the only Australian income you have.

Your children are enrolled in school in Country Y.

You have a sibling living in Country Y.

You and your family are establishing social connections in Country Y.

You have suspended your Australian health insurance.

You have removed your name from the Australian Electoral Roll.

You have obtained health cover in Country Y for your whole family.

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

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

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 Residency - Permanent place of abode outside Australia (IT 2650) and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia (TR 98/17).

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 left Australia in a prior year to relocate to Country Y.

•         Your family joined you in Country Y several weeks later.

•         You have an employment contract for several years in Country Y which can be extended.

•         Your children are enrolled in school in Country Y.

•         You are renting an apartment in Country Y and you have purchased items for this property.

•         It is your intention to remain outside Australia for the foreseeable future.

•         You will only return to Australia for work visits.

You are not 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 your domicile of origin is Country Y. You later immigrated to Australia and became an Australian citizen.

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 you have a permanent place of abode outside Australia. This is because:

•         You went to Country Y to live and work.

•         Your family has gone to Country Y with you.

•         You have a work contract for several years and this can be extended.

•         You are renting accommodation in Country Y which is for your and your family's sole use and acquired furnishings and a long-term vehicle lease.

•         You will only return to Australia for work purposes a number of days per year.

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 have not been in Australia for more than 183 days since leaving Australia.

You do not intend on being in Australia for more than 183 days in any financial year into the future.

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 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 not a resident of Australia for taxation purposes from the time you left Australia.