Edited version of private advice

Authorisation Number: 1051986861357

Date of advice: 8 June 2022

Ruling

Subject: Residency

Question

Were you a resident of Australia for taxation purposes for the relevant income year?

Answer

No.

This ruling applies for the following period:

Year ended 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.

You are a citizen of Australia.

You are not a permanent resident of any other country.

You went to Country Z to work.

You obtained employment with the Government in Country Z.

You were employed to work on various projects.

The duration of your employment is on a full time basis.

You hold a Country Z residency permit which is sponsored by your employer and has an expiry date a few year into the future.

The contract duration is one year with automatic renewal.

You are sponsored by your employer for a work visa which is renewable on an annual basis.

Prior to your departure you resided with your parents in Australia.

You do not own a residential property in Australia in which to reside or as an investment property and you had not been leasing any such property.

Prior to leaving Australia you sold your main assets being your car and your camera equipment.

You took the majority of your clothes to Country Z with you on the flight, along with your laptop and iPad.

You were required to remain in quarantine in Country Z when you arrived.

This was due to Country Z COVID measures.

Following this you were provided with one month's accommodation in a Country Z hotel by your employer, so that you had time to acclimatise and locate your own residential accommodation.

To lease long-term residential accommodation in Country Z, you were required to obtain bank cheques, and to do so you required a Country Z identification document, It took over 2 months for you to be issued with your Country Z ID, consequently following the one month stay in the hotel accommodation, you located a short‐term apartment in which to reside, which you paid for in cash.

Following the issue of your Country Z ID, you located and leased long-term residential accommodation yourself.

You were provided with a small accommodation allowance by your employer.

Since your arrival in Country Z you have permanently resided in Country Z.

Your current lease is a 12 month renewable lease.

The accommodation was partly furnished and comprised a bed, settee, fridge/freezer and dining table and chairs.

In order for the accommodation to be appropriately furnished you have purchased personal effects such as a new settee, side tables, paintings, rugs, bed linen, pillow, an ironing board and iron, white goods, crockery, plates, cutlery, cups, an Xbox etc.

You have directly engaged a cleaner on a number of occasions since commencing the lease; the accommodation does not provide a cleaning service.

You do not have a spouse or any dependants.

You live in Country Z on your own. Your direct family members all reside in Australia.

You have put your health policy in Australia on hold for the maximum period of 2 years.

You have a Country Z bank account into which your salary is paid and you also have a Country Z mobile phone account.

You hold a membership at a beach resort in Country Z which gives you access to the gym and pool.

You have a group of friends in Country Z with whom you regularly engage to play competitive video games and artistic endeavours, such as drawing and painting.

Since your departure from Australia you have only returned once for a number of days to visit friends and family.

You held a return ticket for a trip back to Country Z.

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

You intended on being in Country Z for the foreseeable future at the very least 2 years.

For personal and health reasons you are considering resigning your position and returning to Australia in a few months.

You are not eligible to contribute to the PSS or the CSS super funds.

Relevant legislative provisions

Income Tax Assessment Act 1936

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 not residing in Australia according to ordinary concepts.

This is evident from the following:

•         You went to Country Z a few years ago to work.

•         It was your intention when you left Australia to live and work outside Australia for at least 2 years and most likely for longer.

•         You have made a short trip back to Australia since leaving.

•         Your contract in Country Z is full time and can be extended.

•         Your residency permit for Country Z expires in a few years.

•         You rent accommodation in Country Z.

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.

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 Australia and you are a citizen of Australia.

You have not changed your domicile of origin.

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

•         You have gone to Country Z for work purposes.

•         When you left Australia it was your intention to be in Country Z for at least a couple of years.

•         You live in rented accommodation for your sole use in Country Z.

•         You have purchased a number of household items for your accommodation in Country Z.

•         You took all of your personal belongings to Country Z with you.

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 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

You are not a resident of Australia for taxation purposes for the relevant income year.