Edited version of private advice

Authorisation Number: 1052089748043

Date of advice: 21 February 2023

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No.

Question 2

Is your foreign sourced income assessable in Australia?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20YY

The scheme commences on:

1 July 20YY

Relevant facts and circumstances

You were born in Country Y.

You are a citizen of Country Y.

You hold a permanent resident Visa to enter Australia.

You have been a non-resident of Australia in all prior income years.

You have children who are studying in Australia.

You have spent X days in Australia in the 20YY income year.

Your spouse holds a permanent resident Visa and has been a non-resident of Australia for taxation purposes in prior income years.

You and your spouse departed Australia on DD MM 20YY to return to Country Y.

You have a home in Australia which you and your spouse own, and you have a bank account.

You and your spouse stay in this home in Australia when you are visiting your children.

The house remains vacant while you and your spouse are in Country Y.

The house is fully furnished and holds your belongings.

You and your spouse maintain a home in Country Y.

You lodged tax returns in Country Y in past income years and will do so going forward.

You financially support your children while they are studying in Australia.

Your children are not citizens of Australia.

They stay in Australia on study visas.

You have X houses in Country Y along with bank accounts and a share in a business.

You do limited work for the business in Australia remotely if required,

You receive a salary and have investment income in Country Y.

You do not receive any income from Australian sources.

You have non-resident withholding on your accounts in Australia.

You and your spouse are not eligible to contribute to the PSS or the CSS Commonwealth 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 relevant income year, 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 consider that your domicile is in Country Y and the Commissioner is also satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

•                     You are a citizen of Country Y

•                     You live and work in Country Y

•                     You have a permanent resident Visa to enter Australia

•                     Your children are studying in Australia Your children are not citizens of Australia and stay in Australia on study visas

•                     You make short trips to Australia to visit your children

•                     In the 20YY income year you may exceed 183 days in Australia

•                     Your usual place of abode is in Country Y

•                     You financially support your children in Australia

•                     You have a home in Australia which is available to you and your spouse at all times for when you visit your children

•                     You have X houses in Country Y along with bank accounts and a share in a business

•                     You receive a salary and have investment income in Country Y.

•                     You do not receive any income from Australian sources.

Although you may exceed 183 days in Australia in the 20YY income year you do not intend on taking up permanent 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.

You are not required to declare your foreign sourced income in an Australian tax return.