Edited version of private advice

Authorisation Number: 1052065203725

Date of advice: 14 December 2022

Ruling

Subject: International - residency

Question

Were you an Australia resident for tax purposes for the 20XX income year?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 November 20XX

Relevant facts and circumstances

You were born in Country A and are a citizen of Country A.

From 19XX to 19XX you resided in Australia with your two young children. You did not work during this period.

Towards the end of your stay you became an Australian citizen.

After becoming an Australian citizen, you returned to Country A where your spouse continued to reside and work as a secondary school teacher.

You worked as a primary school teacher in Country A.

Your two children grew up in Country A until 20XX when they came to Australia to continue their high school education.

You and your spouse came to Australia with your children to settle them into boarding with the high school before returning to Country A.

In 20XX you purchased a property in City A in Australia, for your children to live in during the term breaks, holidays and their impending university education.

During the years from 20XX to November 20XX, you and your spouse travelled to City A to see your children during term breaks and holidays.

Your visits were only brief, as you and your spouse had careers in Country A, and your children were growing into adults.

During the COVID-19 pandemic, there were various travel restrictions imposed by both the Australian and Country A's Governments.

You were prevented from travelling to Australia from the beginning of COVID in 20XX until November 20XX.

In November 20XX, you travelled to Australia, having booked a return flight to Country A departing on XX January 20XX.

The airline then cancelled your return flight and you were put on to a waiting list for the next available flight.

During the period from January 20XX until XX May 20XX, you continued to contact the airline trying to get a flight home to Country A. They cancelled your flight X times.

While you were in Australia you stayed with your children. You did not work and you did not establish any connections through sport or community involvement.

In April 20XX Country A's Government lifted the suspension and allowed Country A residents to return home.

There were limited flights available and you were placed on a waiting list.

In May 20XX you were able to secure a flight back to Country A and departed Australia on XX May 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(1)

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(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 from when you arrived in Australia in November 20XX until your departure date in May 20XX, you were not a resident of Australia as follows.

Taking into account your individual circumstances, we have concluded that you were not a resident of Australia according to ordinary concepts.

We also consider that your domicile was not in Australia.

You were in Australia for 183 days or more during the 20XX income year, however 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.

We considered the following factors in forming our conclusion:

•         You were born in Country A and are a citizen of Country A.

•         You live in Country A with your spouse.

•         You and your spouse work in Country A.

•         Your children spent the majority of their childhood in Country A but moved to Australia in 20XX to complete their studies.

•         You visit them several times a year, but your visits are usually brief consisting of term breaks and holidays, and then you return to Country A.

•         When you visit Australia you stay with your children, in a house that you purchased for them to live in during breaks from school, and then while they studied at university.

•         You came to Australia in November 20XX to visit your children, and had booked a return flight to Country A.

•         You always intended on returning to Country A after your visit, however COVID restrictions meant you were unable to get a flight home.

•         You did not work while you were in Australia.

•         You didn't establish any connections to Australia through sport or community involvement.

•         You have since returned to Country A, getting the first available flight when the restrictions were lifted.

Based on the information provided, you are a not resident of Australia under this test

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