Edited version of private advice

Authorisation Number: 1052055740953

Date of advice: 9 November 2022

Ruling

Subject: Residency - assessable income

Question

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following periods:

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 were born in Australia.

You are an Australian citizen.

You are not a citizen of any other country.

You are not a permanent resident of any other country.

You have gone to Country Y to live and work.

You ended your lease on a residential property in Australia when you left Australia.

You have been granted a 3-year visa in Country Y (renewable every 12 months).

During the period of the 3-year visa, or at the end of the 3-year period, you intend to apply for a permanent visa in Country Y or another country.

You have entered into a 12-month rental agreement in Country Y which is extendable.

You have shipped your personal belongings to Country Y.

You have obtained a Country Y Tax File Number and will file Country Y Tax Returns.

You will spend limited time in Australia following your relocation to Country Y. It is expected you will spend less than 45 days in Australia per income year.

You have no idea where you will stay when you return to Australia as you do not have any plans at present.

You do not have dependent children or a spouse.

You own the following Australian assets:

•         A rental property which is currently on the market to be sold.

•         Cash in a savings account which is to be transferred to an overseas bank account, and

•         Superannuation.

You have informed your Australian financial institutions that you now reside in Country Y.

You have informed the Australian Electoral Commission that you will be residing in Country Y.

You have cancelled your Australian private health insurance.

You have taken out Private Health Insurance in Country Y.

You will be transferring your share of ownership (50%) of your car to your former spouse.

You are 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

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 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 relevant 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 have ended your residential lease in Australia

•         You are renting a property in Country Y

•         You have a 3 year visa to remain in Country Y

•         You intend to extend the visa or apply for a permanent visa

•         You only intend on returning to Australia for short visits.

You will not be in Australia for 183 days or more during the relevant income years.

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