Edited version of private advice

Authorisation Number: 1052095560862

Date of advice: 21 March 2023

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes from XX November 20XX?

Answer

No.

This ruling applies for the following periods:

Year Ending 30 June 20XX

Year Ending 30 June 20XX

Year Ending 30 June 20XX

Year Ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are an Australian citizen.

You relocated to Country Z on XX November 20XX.

You intend to relocate to the Country Z for a period of greater than XX years.

You have obtained a Country Z Residency Permit that was issued on XX November 20XX and expires on XX November 20XX. This permit can be renewed annually.

You have incorporated a COUNTRY Z Company in which you will carry out your employment and investment activities from COUNTRY Z. You are the sole director and shareholder of the COUNTRY Z Company.

You will spend limited time in Australia following your relocation to COUNTRY Z. It is anticipated that you will spend less than 30 days in Australia per income year.

You have entered into a long-term rental agreement in COUNTRY Z.

You do not own property in Australia and have terminated your rental lease in Australia.

You do not have a spouse or children.

You have shipped your personal possessions to COUNTRY Z.

You have informed all relevant Australian financial institutions of your relocation to COUNTRY Z.

You have informed Medicare of your relocation to COUNTRY Z.

You have informed the Australian Electoral Commission of your relocation to COUNTRY Z.

You are no longer a member of any social or sporting clubs in Australia.

You do not own a motor vehicle.

Except for some cash savings and superannuation, you do not own other assets or investments in Australia.

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 4 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, from XX November 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 relocated to Country Z on XX November 20XX.

•         You intend to relocate to Country Z for a period of greater than XX years.

•         You have incorporated a Country Z Company in which you will carry out your employment and investment activities from Country Z. You are the sole director and shareholder of the Country Z Company.

•         You have obtained a Country Z Residency Permit that was issued on XX November 20XX and expires on XX November 20XX. This permit can be renewed annually.

•         You will spend limited time in Australia following your relocation to Country Z. It is anticipated that you will spend less than 30 days in Australia per income year.

•         You entered into a long-term rental agreement in Country Z.

•         You do not own property in Australia and have terminated your rental lease in Australia.

•         You have shipped your personal possessions to Country Z.

•         You have informed all relevant Australian financial institutions of your relocation to Country Z.

•         You have informed Medicare of your relocation to Country Z.

•         You have informed the Australian Electoral Commission of your relocation to Country Z.

You have not been in Australia for more than 183 days in any income year since you left Australia.

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.