Edited version of private advice

Authorisation Number: 1051982461482

Date of advice: 20 May 2022

Ruling

Subject: Residency

Question

Are you a resident for taxation purposes from 20XX until 30 June 20XX?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

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 Australia and are an Australian citizen.

You have worked in the same field since graduating high school.

In 20XX, you were notified by your employer that you would be transferred to Country X to work on a project that would last approximately X years.

From 20XX to 20XX, you completed two assignments in Australia for your work.

You received a formal offer to commence your work in Country X in 20XX however were not able to start until 20XX due to security issues.

You decided to travel prior to your project in Country X commencing.

You purchased a boat and lived on it.

This boat was moored in registered marinas.

Your employer allowed you to work in Country Y in order for you to learn the dominant language in Country X.

You lived in Country Y for several months.

You sold your boat.

You then commenced your role as a Health and Safety Specialist in Country X in 20XX.

You then changed your point of hire to Country Z.

You obtained a visa to stay in Country Z.

You have lived in Country Z since 20XX.

You have leased three properties in Country Z which are all in close proximity of one another.

You sold your home in Australia in 20XX.

You made several trips to Australia in 20XX and 20XX to visit family and friends.

You travelled to Australia to undertake a work-related course in 20XX.

In 20XX you were unable to return to your home in Country Z from Country Y due to Covid-19 restrictions.

As you were unable to travel to Country Z, you decided to return to Australia until you were able to return to either Country X to work or to your home in Country Z.

You met your spouse whist you were in Australia. You now have a child together.

You departed Australia after several months and returned to Country X to recommence working.

You remained in Australia due to Covid-19 restrictions for a few months, and then returned to Country X to recommence working.

Due to local conditions, your project in Country X was placed on hold.

You then returned to Country Z to be with your spouse and your child who had moved there permanently.

You intended on travelling back to Country X once the hiatus ends, or alternatively another overseas location offered by your employer.

You intend on transitioning to a permanent role in Country Z when your current project in Country X finishes.

Your extended family lives in Australia.

You do not intend to travel to Australia frequently in the future.

You have an Australian bank account that is primarily used to purchase gifts for relatives and friends in Australia.

You have shares in Australia.

Your child attends day-care in Country Z and you intend to enrol them in school in Country Z.

You are a member of various community and sporting groups in Country Z.

You attend local parenting group meetings in Country Z.

You take language classes in Country Z twice per week.

You have a bank account in Country Z.

You intend on living in Country Z for the foreseeable future and intend on applying for permanent residency and citizenship.

You and your spouse own a business in Country Z.

Your personal and household effects are stored at your home in Country Z.

You have a visa that allows you to stay temporarily in Country Z.

You plan to retire in Country Z.

You will travel back to Country X for work once the hiatus ends, or potentially another overseas location with a fly in/ fly out arrangement in place.

You may travel for a holiday in the coming years; however, you would prefer to spend time with your spouse and your child in Country Z.

When completing incoming visitor cards, you have stated that you are a visitor or a temporary entrant.

You are a resident of Country Z for tax purposes.

You are permitted to enter Country X under a work visa which is renewed by your employer as required.

Your spouse and your child do not accompany you to Country X as the family home is in Country Z, your child is young which makes travelling difficult, your spouse must remain in Country Z to manage your business and it is not practical for them to reside in Country X.

Your spouse and your child also hold visas which allow them to stay temporarily in Country Z.

Your spouse intends to apply for permanent residency in Country Z, however, must remain on a temporary stay visa for several years to do so.

You provide financial support to your spouse and your child whilst working in Country X.

The income generated from your Country Z business will also assist in supporting your family whilst you are in Country X.

You have not maintained any professional, social, or sporting connections in Australia.

You have an Australian driver's licence which will expire soon.

You do not have a driver's licence in Country Z as you do not have a vehicle in Country Z.

You are not listed on the Australian electoral roll.

You attempted to cancel your Medicare however were unsuccessful at doing this.

You have been covered by your employer's global insurance provider.

You intend on purchasing property in Country Z when the law will permit you to.

You receive your mail at your residential address in Country Z.

You commenced a short-term posting with your employer in Australia in 20XX.

Under a FIFO arrangement, you return to Country Z when you are not rostered on.

Whilst in Australia you reside in accommodation provided by your employer.

Neither you nor your spouse are Commonwealth of Australia Government employees for superannuation (super) purposes.

Neither you nor your spouse are members of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

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

Reasons for decision

Question

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 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.

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 you residing in Australia.

This is because:

•         You have been working in Country X since 2018.

•         You have lived in Country Z since 2019.

•         You return to Country Z when you are not rostered to work.

•         You are currently leasing a property in Country Z.

•         Your spouse and your child live in Country Z.

•         Your personal and household effects are Country Z.

•         You receive your mail in Country Z.

•         You have established a business in Country Z.

•         You do not have a permanent residence available to you in Australia.

•         You do not intend on returning to Australia to live.

•         You intend on obtaining permanent residency and citizenship in Country Z.

You are not a resident of Australia 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 Australia and your domicile of origin is Australia.

It is considered that you have not abandoned your domicile of origin in Australia and acquired a domicile of choice in Country Z. You are not entitled to reside in Country Z indefinitely and while living in Country Z you only hold a temporary short stay visa, which is only valid for up to X years.

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 satisfied that your permanent place of abode is outside Australia. This takes into account that:

•         You have been working in Country X since 20XX.

•         You have lived in Country Z since 20XX.

•         You return to Country Z when you are not rostered to work.

•         You are currently leasing a property in Country Z

•         Your spouse and your child live in Country Z.

•         Your personal and household effects are in Country Z.

•         You receive your mail in Country Z.

•         You have established a business in Country Z.

•         You do not have a permanent residence available to you in Australia.

•         You do not intend on returning to Australia to live.

•         You intend on obtaining permanent residency and citizenship in Country Z.

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 not present in Australia for 183 days or more during the relevant income years.

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 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

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 years ended 30 June 20XX, 20XX, 20XX and 20XX.