Edited version of private advice

Authorisation Number: 1052047699452

Date of advice: 24 October 2022

Ruling

Subject: Residency

Question

Are you a foreign resident for taxation purposes?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 20XX

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 XXXX

You are a citizen of both XXXX and Australia

You departed Australia for XXXX on XXXX.

Your spouse left Australia on XXXX with no intention to return.

You now reside permanently in XXXX with no intention to return to Australia.

You hold an XXXX visa, issued in XXXX. This visa is valid for as long as your spouse retains his employment with XXXX and is renewed every year.

You are currently residing at XXXX. This is a company accommodation, linked to your spouse's employment and rent is deducted each month through your spouse's payroll deduction. You are unable to own property in XXXX and therefore we will not be purchasing your own home there.

Following your decision to depart Australia and commence a new life in XXXX, you started decluttering of your family home and started packing in approximately XXXX.

A Real Estate Agent was engaged on XXXX to sell the family home in Australia. The property was listed for sale on XXXX and was sold on XXXX.

You own an Investment Property in Australia which is currently being rented.

You hold an Australian bank account to pay utilities, rates, life insurance and the mortgage for the rental property in Australia. You also have an investment bond account and a superannuation fund in Australia.

Private Health Insurance in Australia was cancelled on XXXX.

You hold a current Medicare card in Australia; however, as you have not been able to access your MyGov from overseas, your intention is to cancel this when you next visit Australia.

Your children started school in XXXX on XXXX.

Since relocating to XXXX you have joined the XXXX club, the XXXX club and the XXXX club in XXXX.

You are not a member of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS)

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 Draft Taxation Ruling TR 2022/D2 Income tax: residency tests for individuals.

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.

Application to your situation

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

•         You have been physically present in XXXX since XXXX.

•         You have no intention of returning to Australia.

•         You are currently residing at XXXX. This is a company accommodation, linked to your spouse's employment and rent is deducted each month through your spouse's payroll deduction.

•         You hold an XXXX resident visa, issued in XXXX. This visa is valid for as long as your spouse retains their employment with XX and is renewed every year.

•         Your stated purpose to reside permanently in XXXX is evidenced by the sale of your family home in Australia.

•         Your spouse commenced employment with XXXX in XXXX on XXXX on a permanent ongoing contract.

•         You have commenced memberships in XXXX you have joined the XXXX club, the XXXX club and XXXX club.

•         Both of your children are attending school in XXXX.

Therefore, you are not a resident of Australia under the resides 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.

Application to your situation

In your case, you were born in XXXX and your domicile of origin is XXXX. You did however immigrate to XXXX and became an XXXX citizen.

It is considered that you did not abandon your domicile of origin and acquire a domicile of choice in XXXX. You were not entitled to reside in XXXX indefinitely and while living in XXXX, you hold only held a XXXX visa which is valid for as long as your spouse has a job at XXXX. It is renewed each year.

Therefore, your domicile is Australia.

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 phrase 'permanent place of abode' calls for a consideration of the physical surroundings in which you live, extending to a town or country. 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 their permanent place of abode outside Australia are:

•  whether the taxpayer has definitely abandoned, in a permanent way, living in Australia

•  whether the taxpayer is living in a town, city, region or country in a permanent way.

The Commissioner considers the following factors relevant to whether a taxpayer's permanent place of abode is outside Australia:

(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.

Application to your situation

We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia:

•         You have been physically present in XXXX since XXXX.

•         You are currently residing at XXXX. This is a company accommodation, linked to your spouse's employment and rent is deducted each month through your spouse's payroll deduction.

•         You hold an XXXX visa, issued in XXXX. This visa is valid for as long as your spouse retains their employment with XXXX and is renewed every year.

•         Your stated purpose to reside permanently in XXXX is evidenced by the sale of your family home in Australia.

•         You have commenced memberships in XXXX you have joined the XXXX club, the XXXX club and XXXX club.

•         Both of your children are attending school in XXXX.

The Commissioner is satisfied that your permanent place of abode is outside Australia.

Therefore, you are not a resident of Australia under the domicile 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.

Application to your situation

You have been in Australia for 183 days or more in the 20XX income year. Therefore, you will be a resident under this test unless the Commissioner is satisfied that your usual place of abode was outside Australia and you do not have an intention to take up residence in Australia.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live, and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836.

Application to your situation

We have taken the following into consideration when deciding whether your usual place of abode is outside of Australia:

•         You have been physically present in XXXX since XXXX.

•         You are currently residing at XXXX. This is a company accommodation, linked to your spouse's employment and rent is deducted each month through your spouse's payroll deduction.

•         You hold an XXXX visa, issued in XXXX. This visa is valid for as long as your spouse retains their employment with XXXX and is renewed every year.

•         Your stated purpose to reside permanently in XXXX is evidenced by the sale of your family home in Australia.

•         You have commenced memberships in XXXX you have joined the XXXX club, the XXXX club and XXXX club.

•         Both of your children are attending school in XXXX.

Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income years.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Application to your situation

We have taken the following into consideration when deciding whether you intend to take up residence in Australia:

•         You have been physically present in XXXX since XXXX.

•         You have no intention of returning to Australia.

•         You are currently residing at XXXX. This is a company accommodation, linked to your spouse's employment and rent is deducted each month through your spouse's payroll deduction.

•         You hold an XXXX resident visa, issued in XXXX. This visa is valid for as long as your spouse retains their employment with XX and is renewed every year.

•         Your stated purpose to reside permanently in XXXX is evidenced by the sale of your family home in Australia.

•         Your spouse commenced employment with XXXX in XXXX on XXXX on a permanent ongoing contract

•         You have commenced memberships in XXXX you have joined the XXXX club, the XXXX club and XXXX club

•         Both of your children are attending school in the XXXX.

Based on your circumstances, the Commissioner is satisfied that you did not intend to take up residence in Australia for the relevant income year.

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 situation

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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes from XXXX.