Edited version of private advice

Authorisation Number: 1052050941598

Date of advice: 28 October 2022

Ruling

Subject: Residency

Question

Are you an Australia resident for tax purposes for the financial year ending 30 June 20XX?

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 Country A.

You arrived in Australia with the intention of residing in Australia permanently.

You and your late spouse purchased a property in Australia as tenants in common and moved into the property upon completion of the building in the same year.

The property has been your main residence until you moved.

You now reside in another property you own in Australia.

Since arriving in Australia you have been on a Sponsored Parent Temporary visa (subclass 870).

Prior to departure from the Country A, you and your late spouse had property in Country A which you disposed of prior to arrival in Australia.

The vast majority of time since you arrived in Australia has been spent in Australia with only occasional and temporary travel overseas to visit family and friends.

When travelling overseas you would stay with family or friends or in short term accommodation.

Your children were grown adults when you moved to Australia and no other dependants exist.

A large reason for your relocation to Australia was to be with your adult grandchild and great grandchild.

You have been a long-term volunteer for a social club in your state in Australia.

On incoming and outgoing passenger cars you state resident of Australia and list your Australian address.

You have applied for permanent residency in Australia.

You do not own any overseas assets.

In Australia, you own two properties and have an Australian bank account and are the trustee of an Australian discretionary trust that holds Australian shares.

You receive a minor Country A pension.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

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

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 since arriving in Australia you are a resident of Australia as follows.

Taking into account your individual circumstances, we have concluded that you are a resident of Australia according to ordinary concepts.

We also consider that your domicile is in Australia and the Commissioner is not satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

•         You have only spent short periods of time overseas since arriving in Australia, and only for holiday or visiting family and friends.

•         You intended to reside in Australia permanently from when you arrived

•         You do not have a place of abode overseas and stay with family, friends or in short term accommodation when you do go overseas

•         Your assets including property and investments are in Australia, you do not own any assets overseas

You will be in Australia for 183 days or more during the 20XX income year and the Commissioner is not satisfied that both:

•         your usual place of abode is outside Australia, and

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

We considered the following factors in forming our conclusion:

•         Your children were grown adults when you departed the Country A and you do not have any other dependants

•         You do not have any employment ties with the Country A

•         You disposed of your old main residence in the Country A before relocating to Australia

•         You intended to reside in Australia permanently from when you arrived

•         Your adult grandchild and great grandchild live in Australia

•         You intend to remain residing in Australia for the foreseeable future.

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