Edited version of private advice

Authorisation Number: 1051996414844

Date of advice: 24 June 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes for the years ending 30 June 20XX to 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 Country X.

You are a citizen of Country X and Australia.

You intend to visit Australia on a temporary basis in each year.

You do not intend to live in Australia on a permanent basis.

Your stays in Australia will not exceed 6 months in any one year.

You are retired.

You were appointed chairmen of an Australian charitable trust during the 20XX year.

You own residential property in both Country X and Australia.

You consider Country X to be your home.

Your principal residence is in Country X.

The majority of your assets are in Country X.

You will stay in your property when you are visiting Australia.

You have no family.

You have limited business ties in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

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

Reasons for decision

Summary

You do not satisfy any of the four tests of residency and so are not a resident of Australia for tax purposes for the years ended 30 June 20XX to 30 June 20XX under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997).

Detailed reasoning

Section 995-1 of (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 do not intend to live permanently in Australia. You only come to Australia for short periods, and you will not be in Australia for more than 6 months in any one year. You have no family and limited business ties in Australia. The majority of your assets are located in Country X. While you do have one property located in Australia, it is not your principal place of residency; you only intend to stay in it during your short visits to Australia. As you will not be living in Australia on a permanent basis you would therefore not be residing in Australia according to ordinary concepts.

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 Country X and you are also a citizen of Country X. You are also a citizen of Australia.

It is considered that you did not abandon your domicile of origin in Country X and acquire a domicile of choice in Australia. Although you are a dual citizen of Country X and Australia, you consider Country X to be your home, your principal residence is in Country X and you only intend to reside in Australia for three to four months within any one year.

You are not a resident of Australia under this test.

183-day test

Where a person is present in Australia for 183 days during a year of income, the person will be a resident for tax purposes, 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 will not be present in Australia for 183 days or more during the relevant years.

You are not a resident of Australia 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.

Therefore, you are not a resident of Australia under this test.

Conclusion

You do not satisfy any of the four tests of residency and so are not a resident of Australia for income tax purposes for the years ended 30 June 20XX to 20XX.