Edited version of private advice

Authorisation Number: 1052069430526

Date of advice: 15 December 2022

Ruling

Subject: Residency - assessable income

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No.

Question 2

Is the income you derive in Country Y Australian sourced and required to be declared in your Australian tax return?

Answer

No.

This ruling applies for the following periods:

Year ended 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 Australia.

You are a citizen of Australia.

You and your family left Australia on XXXX 20XX to go to Country Y.

You intend on being in Country Y on a long-term basis.

Your spouse was born in Country Y, and you had always been thinking about making the move to live and work in Country Y.

You commenced looking for a job in Country Y in 20XX and you were offered a position.

This position is from XXXX 20XX to XXXX 20XX with the option to renew the contract until XXX 20XX.

You sold your motor vehicles in Australia and had your personal and household items freighted to Country Y.

Your children are enrolled in schools in Country Y.

You and your spouse are renting a property in Country Y.

Your employer contributes $XXXX to the cost associated with this property.

The property is furnished but you have purchased additional items for the property.

You have purchased a motor vehicle for the use of the family.

Your spouse has purchased a boat.

Your home in Australia is being rented out while you are in Country Y.

You have a bank account and shares in Australia.

You have a bank account, furnishings, and a motor vehicle in Country Y.

You are a resident of Country Y for taxation purposes.

You have not been back to Australia since leaving.

You will return to Australia for short visits to see family and friends.

You have suspended your Australian health insurance.

You have had your name removed from the electoral roll.

Neither you nor your spouse are 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 income year ending 30 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.

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 and your family have gone to Country Y

•         You rent accommodation in Country Y

•         You are working in Country Y

•         You are renting your home out in Australia

•         You do not intend on coming back to Australia in the near future to live and work

You will only come to Australia for short visits.

You do not intend on taking up residency in Australia and your usual place of abode is in Country Y.

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

You are not a resident of Australia for taxation purposes.

The Commissioner is satisfied that the income you derive from your work in country Y is not Australian sourced and therefore not required to be declared in your Australian tax return.