Edited version of private advice

Authorisation Number: 1052023099829

Date of advice: 7 October 2022

Ruling

Subject: Residency - assessable income

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No.

Question 2

Is the salary you earn while in Country Y assessable in Australia?

Answer

No.

This ruling applies for the following periods:

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 Country X.

You are a citizen of Australia and Country Z.

You relocated to Country Y in the 20XX income year.

It is your intention to be in Country Y for more than 2 years.

You may extend your time in Country Y to 20XX.

You are a professional and you have gone to Country Y to carry out your work.

You have a Country Y 'Resident and Work Permit' which is valid for X months with an extra X months for job seeking.

The permit will be renewed where you extend your employment with your current employer.

You have entered into a long-term lease agreement in Country Y.

You have no direct family in Australia.

You have lodged a Country Y tax return for their latest income tax period.

You will also lodge a Country Y tax return for their next income tax year.

You advised your Australian bank that you were living overseas.

You took your name off the Electoral Roll.

You own a real estate property in Australia which was your main residence.

You have rented the property out since you relocated to Country Y.

You have investments in some Australian ETFs, some cash in an Australian bank account and Australian superannuation.

You have not return to Australia since you left for Country Y.

You do not intend on coming back to Australia until 20XX at the earliest.

You do not have a spouse or any dependants.

You sold and gave away most of your belongings which you did not take to Country Y with you.

You do not have any social or sporting connections in Australia.

You are a member of a gym in Country Y.

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

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

For tax purposes, whether you are a resident of Australia is defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

The definition has four tests to determine your residency for income tax purposes. These tests are:

•                     the resides test

•                     the domicile test

•                     the 183 day test, and

•                     the Commonwealth superannuation fund test.

It is sufficient for you to be a resident under one of these tests to be a resident for tax purposes.

Our interpretation of the law in respect of residency is set out in:

•                     Taxation Ruling IT 2650 Income tax: residency - permanent place of abode

•                     Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

The resides test

The resides test is the primary test of tax residency for an individual. If you reside in Australia according to the ordinary meaning of the word resides, you are considered an Australian resident for tax purposes.

Some of the factors that can be used to determine whether you reside in Australia include:

•                     period of physical presence in Australia

•                     intention or purpose of presence

•                     behaviour while in Australia

•                     family and business/employment ties

•                     maintenance and location of assets

•                     social and living arrangements.

No single factor is decisive, and the weight given to each factor depends on your specific circumstances.

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 domicile test

Under the domicile test, if your domicile is in Australia, you are a resident of Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Whether your domicile is Australia is determined by the Domicile Act 1982 and the common law rules on domicile. For example, you may have a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

Whether your permanent place of abode is outside Australia is a question of fact to be determined in light of all the facts and circumstances of each case. Key considerations in determining whether you have your permanent place of abode outside Australia are:

•                     whether you have definitely abandoned, in a permanent way, living in Australia

•                     length of overseas stay

•                     nature of accommodation, and

•                     durability of association

The 183-day test

Under the 183 day test, if you are present in Australia for 183 days or more during the income year, you will be a resident, unless the Commissioner is satisfied that both:

•                     your usual place of abode is outside Australia, and

•                     you do not intend to take up residence in Australia.

The question of usual place of abode is a question of fact and generally means the abode customarily or commonly used by you when are physically in a country.

The Commonwealth 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.

Application to your circumstances

We have considered each of the statutory tests listed above in relation to your particular facts and circumstances. We conclude that, for the period you are not a resident of Australia as follows.

Taking into account your individual circumstances, we have concluded that you are not a resident of Australia according to ordinary concepts.

We also consider that your domicile is in Australia and the Commissioner is satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

You intend on being in Country Y for at least 2 years and most likely longer

You may not return to Australia to live

You rent accommodation in Country Y which is for your sole use

You work in Country Y

You will not return to Australia for a visit until your work ends in Country Y

You are renting your Australian property out

You will not be in Australia for 183 days or more during the time you are working in Country Y.

You do not fulfil the requirements of the Commonwealth Superannuation test and are therefore not a resident under this test.

The double tax agreement between Australia and Country Y provides that salary and wage income you earn in Country Y while a resident of Country Y is not assessable in Australia.