Edited version of private advice

Authorisation Number: 1052086408820

Date of advice: 17 February 2023

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 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 Country Y.

You are a citizen of Country Y.

You initially came to Australia to study prior to being employed in Australia in 20XX.

You are a citizen of Australia.

You married an Australian in 20XX.

You have children.

You and your spouse separated in 20XX.

You have worked in a number of different countries.

You and your spouse purchased a home in Australia and lived in it as your main residence.

You and your spouse moved overseas to work.

You manage a business which has offices in Australia and other countries.

You and your spouse returned to Australia to live in 20XX.

You do not stay with your children in your spouse's home when you are in Australia.

You transferred your share of the property in Australia to your spouse.

In April 20XX you made the decision to return to Country Y.

You intend to spend more time with your family in Country Y.

You took most of your individual possessions with you upon your departure, including your clothes and any day-to-day items you required.

You will live in the property in Country Y owned by you and your spouse.

You will visit Australia to see your children and to visit the office of the business.

You will attempt to book into the same accommodation each time you are in Australia to ensure it is close to where your children live.

You will dine with your children most nights that you are in Australia.

You intend on purchasing a property in Australia in the future.

Your spouse will continue to be the primary carer of your children.

You plan to meet your children and spend time with them in other locations outside Australia.

You will continue to support your spouse and children financially by way of an informal agreement.

During the 20XX tax year you spent XX days in Australia before departing. You did not return to Australia during the 20XX tax year.

You intend to travel to Australia on a regular basis (likely monthly), spending approximately XXXXX each month visiting your children.

In an income year, you expect you will spend approximately on average XXXX days in Australia, or around one third of the year.

This travel pattern is expected to commence from January 20XX.

You have the majority of your mail sent to your home in Country Y.

You have a Country Y driver's license.

You have professional memberships in Country Y.

You will maintain some of your connections with Australia, albeit more limited.

You are a resident of country Y for taxation purposes.

You will maintain some assets in Australia.

You do not have a car registered in your name in Australia.

You have an Australian mobile phone; however, the contract is in the company's name.

You currently maintain Australian private health cover.

You have a Medicare card in Australia.

You renewed your Australian driver's licence recently for convenience when he visits your family going forward.

The new driver's licence has the Country Y address both postal and residential.

You and your spouse 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

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms 'resident' and 'resident of Australia', as applied to an individual, are defined in subsection 6(1) of the ITAA 1936.

The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are:

• the resides test (also referred to as the ordinary concepts test)
• the domicile test
• the 183-day test, and
• the Commonwealth superannuation fund test.

The resides test is the primary test for deciding the residency status of an individual. This test considers whether an individual resides in Australia according to the ordinary meaning of the word 'resides'.

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, 183-day test and Commonwealth superannuation fund test).

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.

We have considered the statutory tests listed above in relation to your situation as follows:

The resides test

The ordinary meaning of the word 'reside' has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248 ; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235 ... [W]here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:

• 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.

It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

Because the ordinary concepts test is whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia: Logan J in Pike v Commissioner of Taxation [2019] FCA 2185 at 57 reminds us that 'it is no part of the ordinary meaning of reside in the 1936 Act that there be a "principal" or even "usual" place of residence. ... It is important that ... "resident" not be construed and applied as if there were such adjectival qualifications.' For this reason, the test is not about dominance or exclusivity.

Application to your situation

We have taken the following into consideration when determining whether you meet the resides test:

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

You are residing in Country Y.

You took your personal items with you to Country Y.

You are living in a property which is owned by you and your spouse.

You intend on spending time with your family, parent and sibling in Country Y.

Both your parent and sibling have health issues, and this was part of the reason why you moved back to Country Y.

You intend to visit your children in Australia and intend on coming back monthly for a total of XXXXX days in any financial year.

You will dine with your children most nights while in Australia.

You will stay in temporary accommodation which will be close to the children.

You are a resident of country Y for taxation purposes.

You will come back to Australia for work purposes as well.

Your day-to-day life will be in Country Y.

You are not a resident under the resides test since leaving Australia.

You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test).

Domicile test

Under the domicile test, you are a resident of Australia if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Domicile

Whether your domicile is in Australia is determined by the Domicile Act 1982 and the common law rules on domicile.

Your domicile is your domicile of origin (usually the domicile of your father at the time of your birth) unless you have a domicile of dependence or have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and hold the positive intention to make that country your home indefinitely. Your domicile continues until you acquire a different domicile. Whether your domicile has changed depends on an objective consideration of all relevant facts.

Application to your situation

You were born in Country Y, and you are a citizen of Country Y. Your domicile of origin is country Y.

You acquired a domicile of choice by obtaining Australian citizenship.

You have not abandoned your domicile of choice.

Permanent place of abode

If you have an Australian domicile, you are an Australian resident unless the Commissioner is satisfied that your permanent place of abode is outside Australia. This is a question of fact to be determined in light of all the facts and circumstances of each case.

'Permanent' does not mean everlasting or forever, but it is to be distinguished from temporary or transitory.

The phrase 'permanent place of abode' calls for a consideration of the physical surroundings in which you live, extending to a town or country. It does not extend to more than one country, or a region of the world.

The Full Federal Court in Harding v Commissioner of Taxation [2019] FCA 29 held at paragraphs 36 and 40 that key considerations in determining whether a taxpayer has their permanent place of abode outside Australia are:

• whether the taxpayer has definitely abandoned, in a permanent way, living in Australia
• whether the taxpayer is living in a town, city, region or country in a permanent way.

The Commissioner considers the following factors relevant to whether a taxpayer's permanent place of abode is outside Australia:

(a)  the intended and actual length of the taxpayer's stay in the overseas country;

(b)  whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c)   whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

(d)  whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

(e)  the duration and continuity of the taxpayer's presence in the overseas country; and

(f)    the durability of association that the person has with a particular place in Australia, i.e. maintaining assets in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

As with the factors under the resides test, no one single factor is decisive, and the weight given to each factor depends on the individual circumstances.

Application to your situation

We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia:

You left Australia on XXXX to go to Country Y to live.

You are living in a property in Country Y owned by you and your spouse.

You intend to return to Australia to visit your children on a regular basis.

You will also attend the office of your business in Australia while in Australia.

You transferred your share in your Australian property to your spouse in XXXX 20XX.

You took all your personal items to Country Y with you.

You stay in temporary accommodation in Australia.

The Commissioner is satisfied that your permanent place of abode is outside Australia.

Therefore, you are not a resident of Australia for taxation purposes under this test.

183-day test

Where a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that both:

• the person's usual place of abode is outside Australia, and
• the person does not intend to take up residence in Australia.

Application to your situation

You have not been in Australia for more than 183 days since leaving Australia.

You do not intend on being in Australia for more than 183 days in any of the future ruling years.

You are not a resident of Australia for taxation purposes under this test.

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 situation

You are not a member on behalf of whom contributions are being made to the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test.

Conclusion

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes.