Edited version of private advice

Authorisation Number: 1052081541768

Date of advice: 2 February 2023

Ruling

Subject: Residency

Question

Are you a non-resident for Australian income tax purposes?

Answer

Yes.

This ruling applies for the following periods:

The income year ended 30 June 20XX to the income year ending 30 June 20XX

The scheme commences on:

DD/MM/YYYY

Relevant facts and circumstances

You were born in Australia.

You have dual citizenship with Australia and Country Y.

You had been living in Australia for X years prior to permanently departing Australia on DD/MM/YYYY to move to Country Z to commence a new life.

You have attained your residency visa in Country Z. This visa allows you to stay in Country Z for one year at a time and you renew this visa annually.

You have separated from your spouse. Your children are adults and are no longer your dependents.

You jointly own a property in Australia (the property) with your ex-spouse.

Your ex-spouse continues to reside at the property.

You use the property's address as your mailing address for correspondence that cannot be sent via email, such as passport-related correspondence.

The property is the only asset you own in Australia.

You placed your household and personal effects in storage prior to departing Australia.

You sold your car prior to departing Australia.

You are employed and perform your employment in Country Z.

You are not performing work remotely.

Your employer has provided accommodation for you in an apartment in Country Z.

Your employer is providing you with this accommodation for the length of your employment, which is at least X years.

You can choose to renew your employment contract after the initial X years has passed.

You do not receive income from Australian sources.

You have joined the local gym in Country Z.

You have obtained international Private Health Cover.

You have obtained a driver license in Country Z.

You have removed yourself from the Australian Electoral Role.

You are not a member of any Australian associations.

You will be setting up a bank account in Country Z.

You hold a bank account in Country Y.

You hold bank accounts in Australia.

You have notified your Australian banks that you are no longer a resident of Australia so the non-resident tax withholding rate would apply to the interest income earned on your Australian bank accounts.

You do not intend to return to Australia to live.

You and your ex-spouse were not Australian Government employees for superannuation purposes.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

Overview of the law

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 DD/MM/YYYY to 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 considered the following factors in forming our conclusion:

•         Physical presence - You departed Australia permanently on DD/MM/YYYY and have not been physically present in Australia since this date.

•         Intention - You have no intention of returning to Australia to live.

•         Family ties - You do not have a spouse nor dependants in Australia.

•         Business and employment ties - You do not receive income from Australian sources. Conversely, your employment is located in Country Z.

•         Social arrangements - You are not a member of any Australian associations. Conversely, you are a member of a local gym in Country Z.

•         Living arrangements - Your household and personal effects were placed into storage prior to departing Australia. You also sold your car prior to departing Australia. You have obtained a driver license in Country Z and international Private Health Cover. You have removed yourself from the Australian Electoral Role and notified your Australian banks that you are no longer a resident of Australia. You live in long term accommodation provided by your employer.

•         Maintenance and location of assets - You sold your car prior to departing Australia. Your only remaining asset in Australia is the property you jointly own with your ex-spouse. Your ex-spouse continues to reside in this property.

We consider that your domicile is in Australia, however the Commissioner is satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

•         You have no intention of returning to Australia to live.

•         You departed Australia on DD/MM/YYYY, and your employment term in Country Z is at least X years in length.

•         You are residing in long term accommodation provided to you by your employer. This will be available for the duration of your employment contract.

•         You removed yourself from the Australian Electoral Role and are not a member of any Australian associations. You also informed your Australian banks that you are not a resident of Australia. You sold your car prior to departing Australia and placed your household and personal items into storage.

You were not in Australia for 183 days or more during the income year ended 30 June 2022 and you have advised that you do not intend to return to Australia to live. Therefore, you are not a resident under the 183-day test.

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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes from DD/MM/YYYY to the income year ended 30 June 20XX.