Edited version of private advice

Authorisation Number: 1051978372589

Date of advice: 4 May 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes for the relevant period?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 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 Australia.

You are not a permanent resident of any other country.

You worked for an employer in Australia.

You were relocated to work for their branch in Country Y.

You went to Country Y a few years ago to work.

Your intention was to relocate to Country Y.

You had a permanent position in Country Y with your employer with no end date to the employment.

You entered Country Y on a visa.

This visa allowed you to be in Country Y as long as you were employed.

This visa could be renewed every 2 years and you have done this in the past.

Your spouse was going to relocate with you to Country Y and they joined you a few months after you arrived.

Your spouse then returned to Australia later in the year due to medical reasons.

Your spouse then remained in Australia and gave birth to your child in the following year.

Your spouse was living in your family home in Australia.

You have the following assets in Australia:

•         Your family home

•         A rental property

You have the following assets in Country Y:

•         XXX fund

•         Bank account

You rented a property in Country Y.

You had a lease up until the following year.

You fully furnished this property in Country Y.

You took clothes, jewellery, electronic and kitchenware to Country Y with you.

You made several trips back to Australia.

In the year after you moved to Country Y, you and your spouse decided to remain living in Australia and that you would not return to Country Y.

You and your spouse are not 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 tests.

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 'resides', 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 residing in Australia according to ordinary concepts for the relevant period.

This is evident from the following:

•         You went to Country Y for work.

•         You made several trips back to Australia.

•         These trips were made because of your spouses' condition.

•         You stay with your spouse in your family home on these trips.

•         In the following year after your move, you returned to Australia. The pandemic worsened and you were not able to leave Australia and you, and your spouse made the decision to remain in Australia and not to return to Country Y.

The Commissioner is satisfied that your routine and mode of life was consistent with someone residing in Australia. Although it was your intention to relocate to Country Y, your movements indicate that you did not sever your ties with Australia and you therefore retained a continuity of association with Australia.

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.

You were born in Country Z and you are a citizen of Australia.

You have a domicile of choice in Australia.

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 IT 2650 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 not satisfied that you had a permanent place of abode outside Australia.

•         You went to Country Y for work purposes

•         Your spouse was going to join you but returned to Australia

•         You made several trips back to Australia for

•         You stayed in your family home on these trips

•         You took some personal items to Country Y with you

•         You rented accommodation in Country Y

Although it was your intention to relocate to Country Y and you established your own accommodation in Country Y, your actions indicate that you did not sever your ties with Australia. Therefore, you did not abandon, in a permanent way, living in Australia.

You are 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 present in Australia for more than 183 days during the first income year, were not present in Australia for more than 183 days during the second income year and were present in Australia for more than 183 days during the third income year.

Consequently, you were not a resident under this test for the second income year.

However, you are a resident under this test for the first and third income years as the Commissioner is not satisfied that your usual place of abode was outside Australia for those years.

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 relevant period.