Edited version of private advice

Authorisation Number: 1052036844716

Date of advice: 27 September 2022

Ruling

Subject: Residency

Question 1

Did you cease to be an Australian resident during the year ended 30 June 20XX after you relocated to Country A?

Answer

Yes.

Question 2

Will you be a non-resident of Australia for the remainder of the 20XX income year?

Answer

Yes.

This ruling applies for the following period:

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 were educated in Australia. You have a bachelor's degree and membership with a professional body.

You married in 19XX and have one child who is studying at university.

Person A has two living parents and a sibling who reside in Australia. Person B has one living parent and one living sibling who reside in Australia.

You departed from Australia and arrived in Country A on during the 20XX income year.

You moved to Country A because of your love of the culture and lifestyle as well as Person A's Country A heritage.

You intend to reside in Country A, and nowhere else, indefinitely.

You were granted a visa by the Country A Consulate General in a city in Australia which allows you to lease a property to live in Country A while you formalise your Country A residence permit.

Upon arrival in Country A, you applied for a Country A residence permit which allow you to live in Country A ahead of attending identification meetings later in the year for fingerprinting and to collect your Residence permit.

You have been assured that the permits will be issued given you have been granted a Country A Elective Residency visa.

You have been issued with a Country A tax file number.

You intend to purchase at least one motor vehicle in Country A.

You entered a lease the day after your arrival in Country A for an apartment in Country A.

Your lease is for three years with the ability to renew for an additional two years subject to certain rights in favour of the lessor.

You intend to continue renting your current apartment or rent or purchase a different property in Country A.

You arranged for your mail to be sent to your new premises in Country A before you left Australia.

You have shipped your clothing and some furniture to Country A.

Your Australian assets are listed as follows:

•         Residential home in Australia

•         Interest in residential investment property in Australia

•         Ownership of shares in a private company

•         Superannuation funds

Your intention is for your adult child to continue living in your current home as their main residence for the foreseeable future.

You have cancelled your Australian health insurance, advised relevant institutions of your change of residency and written to the Australian Electoral Commission requesting that your name be removed from the Australian electoral role.

Once your status as a non-resident is confirmed, you will advise Medicare of your change of status.

You intend on retaining your Australian bank accounts to deal with rent receipts and expenses with respect to Australian assets. The cash in these bank accounts will also be treated as investments.

You expect to visit Australia once or twice per year to see family for two or three-weeks each time.

You will support yourself in Country A with cash, dividends and proceeds from investments.

You have generated a level of wealth sufficient to self-fund your retirement.

You currently hold no direct investments outside of Australia but do benefit from an indirect investment in a foreign company.

You are not a member of the Public Sector Superannuation Scheme or an eligible employee under the Commonwealth Superannuation Scheme.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Overview of the law

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 XX July 20XX to XX June 20XX 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.

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

•         You relocated to Country A with no intention of returning to Australia to live

•         Your spouse accompanied you to Country A

•         You have a visa and have applied for a Country A Residence Permit

•         You live in an apartment with a three-year lease in Country A

•         You have cancelled your Australian private health insurance

•         You have had your name removed from the Australian electoral role

•         Your movements and habits are consistent with having a settled routine in Country A.

You will not be in Australia for 183 days or more during the 20XX income year. In any case, your usual place of abode is outside Australia, and you do not intend to take up residence in Australia.

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