Edited version of private advice

Authorisation Number: 1052036239000

NOTICE

The private ruling on which this edited version is based has been overturned on objection.

This notice must not be taken to imply anything about the correctness of other edited versions.

Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.

Date of advice: 23 September 2022

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

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 and your spouse were born in Country Y.

You and your spouse are citizens of Country Y.

You and your spouse have been citizens of Australia for many years.

You and your spouse travel together.

You and your spouse have X children.

All X children usually reside in Country Y but one is living in Australia at present.

You and your spouse purchased a home in Australia shortly after arriving in Australia.

You and your spouse lived in this property up until 20XX.

In XXXX you and your spouse went back to Country Y to live permanently.

You and your spouse rented out your home in Australia up until XXXX 20XX when it was sold.

You and your spouse maintain a home in Country Y and you, and your spouse come to Australia for short visits of 2 weeks each year.

You indicate on the incoming passenger card that you are on holiday in Australia and are residents of country Y.

you and your spouse no longer own any property in Australia.

You and your spouse's latest arrival to Australia was on XX XXXX 20XX.

You and your spouse intended on being in Australia until X XXX 20XX.

You and your spouse have not left Australia since arriving.

You and your spouse have not gone back to Country Y due to Covid travel restrictions, quarantine rules, inadequate and insufficient infrastructure, and hospital beds for the elderly.

You have had some medical issues and you want to remain in Australia in case of any requirement to be hospitalised.

You and your spouse consider country Y to be your home.

You and your spouse live in a property in Country Y provided by your employer which you have lived in for the past 10 years.

The property in Country Y is being looked after by your maid.

You have left all your personal items in Country Y in the house.

You work as a consultant in Country Z.

You have worked at this company for XX years.

You commute daily to work from Country Y to Country Z each day.

You have been working remotely in Australia.

You will return to your usual work schedule when you return to Country Y.

You lodge tax returns in Country Y as a resident of Country Y for taxation purposes.

You have lodged returns in Australia as a non-resident of Australia for taxation purposes.

You and your spouse have shares and bank interest in Australia.

You have not joined any social or sporting clubs in Australia.

You live in a property in Australia which is owned by one of your children.

Neither you nor your spouse have ever been Commonwealth government employees and you are both therefore not eligible to contribute to the PSS or the CSS super funds.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1936 Subsection 6(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 (also referred to as the ordinary concepts test)

•         the domicile test

•         the 183-day test, and

•         the Commonwealth superannuation fund test.

The resides test is the primary test for deciding the residency status of an individual. This test considers whether an individual resides 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 domicile test, 183-day test and Commonwealth superannuation fund test).

Our interpretation of the law in respect of residency is set out in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia (TR 98/17).

We have considered the statutory tests listed above in relation to your situation as follows:

The resides test

The ordinary meaning of the word 'reside' has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

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.

The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:

•         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.

It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

Because the ordinary concepts test is whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia: Logan J in Pike v Commissioner of Taxation [2019] FCA 2185 at 57 reminds us that 'it is no part of the ordinary meaning of reside in the 1936 Act that there be a "principal" or even "usual" place of residence. ... It is important that ... "resident" not be construed and applied as if there were such adjectival qualifications.' For this reason, the test is not about dominance or exclusivity.

TR 98/17 explains that an individual may be considered a resident under the resides test if their behaviour while they are here is such that they exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia according to the ordinary meaning of the word 'reside'.

As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for six months at the same location) they may satisfy the resides test. The period of time of the settled routine need not be confined to one financial year. As long as the pattern of behaviour is exhibited the individual may be regarded as being a resident from the time of their arrival.

We have taken the following into consideration when determining whether you meet the resides test:

You and your spouse have been in Australia since XX XXX20XX.

You and your spouse initially came to Australia for a holiday and intended on returning to Country Y on XX XXXX 20XX.

A number of things caused you to remain in Australia and they included covid travel restrictions, quarantine requirements in country Y and the medical situation in country Y.

You and your spouse are living in a house which is owned by one of your children in Australia.

You have a number of medical issues which may require hospitalisation and due to the medical situation being better in Australia you are choosing to remain in Australia.

You are working remotely for your company in Country Z in Australia.

You are residing in Australia according to ordinary concepts.

Therefore, 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 in 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 a domicile of dependence or have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and 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, your domicile of origin is Country Y and you may have acquired a domicile of choice in Australia on or around the time you were granted citizenship in 19XX. Your domicile may have also reverted to Country Y after you left Australia to resume your life there in 20XX.

Therefore, for the purposes of this private ruling it is accepted that your domicile is Country Y.

You are not a resident under this test.

183-day test

Where a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that both:

•         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 in Australia for 183 days in the 20XX income year.

You are not a resident under this test for the 20XX income year.

You were in Australia for more than 183 days in the 20XX and 20XX income years.

We now need to consider whether we are satisfied that, during the 20XX and 20XX income years that both your usual place of abode was outside Australia and your intention was to take up residence in Australia.

The Commissioner is not satisfied that your usual place of abode for the 20XX and 20XX income years was outside Australia as you have been living in Australia since 20XX and you have not gone back to Country Y because you have health conditions which require medical care and the care in Australia is superior to that in Country Y.

You are a resident under this test for the 20XX and 20XX income 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 are not a member on behalf of whom contributions are being made to 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 under this test.

Conclusion

You are a resident of Australia for taxation purposes.