Edited version of private advice

Authorisation Number: 1052084533280

Date of advice: 7 February 2023

Ruling

Subject: Residency

Question

Are you a resident of Australia for income tax purposes?

Answer

No.

This ruling applies for the following periods:

The income year ended 30 June 20XX

The income year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Your country of origin is Country X.

You are a citizen of Country X and an Australian permanent resident.

You have been physically living in Country Y since July 20XX.

You rented long term accommodation in Country Y during the income years ended 30 June 20XX to 30 June 20XX.

You have a retirement visa which allows you to live and reside in Country Y. You renew this visa annually.

From 20XX, you were charged with building a subsidiary of your employer in Country Y. You performed this role in Country Y and temporarily visited to Country X to perform your employment duties.

Your employer informed their board of your relocation to Country Y.

You appointed an employee to perform your employment duties relating to Australia, allowing you to focus on your employer's expansion in Country Y.

You paid income tax to Country Y in respect of this employment.

You have since resigned from your employer, however continue to look for business opportunities in the same region as Country Y.

Prior to your marriage ending in MM/YYYY, you were living in the family-rented home in Australia. After your marriage ended, you left the family home and moved to Country Y.

You did not and do not own any property in Australia, nor do you rent any property in Australia.

Your mailing address is in Country Y.

Concerning personal relationships, you have:

•         been separated from your ex-spouse since MM/YYYY

•         been in a relationship with a national of Country Y since YYYY

•         two adult children and one child who is a minor, who lives with your ex-spouse in Australia

•         parents who live in Australia.

Your personal property and possessions are in Country Y, except a car. You bought the car for one of your children and intend to transfer the car into their name.

In Country Y, you have:

•         A driver license

•         A bank account

•         A mobile phone number

•         Retail membership cards

•         A vaccination report

In Australia, you have maintained:

•         A private health insurance policy for yourself, ex-spouse and minor child. You pay for this policy. You are currently going through the process of having yourself removed from this policy, however, you intend to continue paying for the policy until your child turns 18

•         A Medicare card

•         A transactional bank account.

You intend to inform Medicare and your private health insurance provider that you have departed Australia.

You do not provide any other financial support to your family in Australia, other than the occasional cash transfer for purposes such as birthdays.

You do not have investments with any Australian financial institutions.

You have an investment in your former employer which has never paid dividends. The co-director of your employer informed your Australian bank that you had relocated to Country Y.

You do not intend to return to Australia at some definite point in time. You may make occasional and ad hoc visits to Australia to visit your children. You expect these trips may happen 2 to 3 times per year, lasting 2 to 4 weeks each.

You intend to retire completely and remain in Country Y. Although you intend to become a permanent resident of Country Y, the process of doing so is long and difficult for foreigners, however may be aided by your relationship with your partner in Country Y.

As you have been a permanent resident of Australia, when completing incoming and outgoing passenger cards, you state that you are a 'Permanent Resident Returning' to Australia.

You have never been employed by the Australian Commonwealth Government and have never belonged to any Commonwealth Superannuation Scheme.

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 income years ended 30 June 20XX and 30 June 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 considered the following factors in forming our conclusion:

•         Physical presence - You have been physically living in Country Y since July 20XX. You were not physically present in Australia during the income year ended 30 June 20XX. You were physically present in Australia for X days in the year ended 30 June 20XX.

•         Intention - You intend to retire completely and remain in Country Y. You do not intend to return to Australia at some definite point in time. You may make occasional and ad hoc visits to Australia to visit your children. You expect these trips may happen 2 to 3 times per year, lasting 2 to 4 weeks each.

•         Family ties - You have been separated from your ex-spouse in Australia since January 20XX and have been in a relationship with a Country Y national since 20XX. You still have a minor child, parents and friends in Australia.

•         Business and employment ties - You do not have any remaining business or employment ties in Australia.

•         Maintenance and location of assets - You do not own nor rent property in Australia. All of your personal property and possessions are in Country Y, except a car. You intend to transfer ownership of this car to your child. You have an investment with your former Country Y employer, which has never paid dividends

•         Social arrangements - You are in a relationship with a national of Country Y.

•         Living arrangements - You rented long term accommodation in Country Y and your mailing address is in Country Y. You have a driver license, bank account, mobile phone number and retail membership cards in Country Y.

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 been living in Country Y since July 20XX.

•         You are on a retirement visa in Country Y, which you renew annually.

•         All of your personal belongings are in Country Y, except a car. You intend to transfer ownership of your car to your child.

•         In Country Y, you have:

o   A relationship with a national of Country Y

o   Long term accommodation

o   A mailing address

o   A driver license

o   A bank account

o   A mobile phone number

o   Retail membership cards.

You were not in Australia for 183 days or more during the income years ended 30 June 20XX and 30 June 20XX and you have advised that you do not intend to return to Australia to live. Therefore, you do not satisfy 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 were not a resident of Australia for income tax purposes in the income years ended 30 June 20XX and 30 June 20XX.