Edited version of private advice

Authorisation Number: 1052107457634

Date of advice: 13 April 2023

Ruling

Subject: Residency

Question

Am I a resident of Australia for tax purposes for the income year ending 30 June 20XX?

Answer

Yes.

This ruling applies for the following period:

The income year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

You are not a citizen of any other country.

In the 3 years prior to the ruling period you were in Australia. You made one 4-week, overseas trip to City A, Country Y and Country Z.

During the ruling period, you were based in Country X from July 20XX to X April 20XX.

Your spouse accompanied you in your travel from Australia to Country X.

Your spouse was born in City B and is a citizen of Australia, Country Z and Country A.

The purpose of your travel to Country X during the ruling period was to spend one year living with your spouse, closer to their elderly parent and family who live in City B.

During your time in Country X, you are stayed in a rental apartment on a X-month lease. You have notified the landlord that you will not renew the contract. You vacated the apartment on DD/MM/YYYY.

You travelled to Country B, Country C and Country D between XX August 20XX and XX September 20XX.

You were in Country C from XX September 20XX to XX October 20XX.

You were in Country E from X April 20XX to X April 20XX.

You are in Country Z from X April 20XX from XX April 20XX.

You will return to and remain in Australia permanently from XX April 20XX onwards.

You have a one-way ticket booked from City C to City D on XX April 20XX.

Your spouse has a one-way ticket booked from City C to City D on XX April 20XX.

In the years going forward, you will remain in Australia with potential holidays of up to 3 weeks in duration, to Continent A and Country Z to visit family every 3 years.

You have applied for residency in Country X.

This visa allows you to stay in Country X for up to X years, not permanently. This visa is still being processed, pending a decision.

You do not intend to apply for citizenship or permanent residency overseas.

You own a home in Australia jointly with your spouse in City D (your home).

When completing incoming and outgoing passenger cards, you state that your residency status is Australia and use your home address.

You were living in your home prior to your departure from Australia.

Your home was first rented out on XX March 20XX.

Your home has been rented to unrelated parties under commercial lease arrangements and normal commercial rates.

The rental of your home is being managed by a real estate agent.

While your home is rented out, you have stored your personal and household effects in a secure storage unit.

You remain responsible for the mortgage over your home whilst overseas.

You continue to have mail sent to your home address.

You continue using your home as your address for banking and investments, the Australian Electoral Commission, mobile phone, rates and Australian driver licence.

You have maintained your Australian driver licence whilst overseas.

You informed the Australian Electoral Commission that you were departing Australia and registered as an overseas voter.

You suspended your private medical insurance when departing Australia.

You hold a 50% share in a transactional bank account in Country X.

In Australia, in addition to your home, you have the following assets:

•         50% share in joint bank accounts, with a value of approximately $XX on DD/MM/YYYY.

•         50% share of a Managed Fund investment, with a value of approximately $XX on DD/MM/YYYY.

•         Superannuation, with a value of approximately $XX on DD/MM/YYYY.

Neither you nor your spouse have been employed during your time overseas.

You may be a tax resident of Country X from X January to XX December 20XX, as you have spent more than 183 days in the region of Country X.

You have family in Australia including your parents and sibling. You have lived in Australia for your whole life and have many friends, whom you have maintained relationships with while overseas.

You are a member of 2 groups in City D, Australia.

You have informal professional networks in Australia, that you have maintained whilst overseas.

You do not maintain any professional, social or sporting connections overseas.

You, nor your spouse, are members of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 or the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

You are not engaged in a course of study.

You have not advised your Australian financial institutions, including any Australian companies with whom you have investments, that you are a foreign resident.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(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 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 you 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 1 July 20XX to 30 June 20XX, you are a resident of Australia for tax purposes as follows.

Taking into account your individual circumstances, we have concluded that you are a resident of Australia according to ordinary concepts. We considered the following factors in forming our conclusion:

•         Physical presence - you were physically present in Australia for less than X months during the income year ended 30 June 20XX. In surrounding income years, you resided in Australia on a permanent basis.

•         Intention or purpose of presence - You are a citizen of Australia. On incoming and outgoing passenger cards, you say your address is your home in Australia. You live in and are settled in Australia. Your overall residency intentions are to reside in Australia permanently. You may be a resident of Country X for tax purposes from X January to XX December 20XX as you were present in Country X for more than 183 days during this period. The purpose of your absence from Australia during the ruling period was to visit your spouse's family overseas.

•         Behaviour while in Australia - You live permanently in Australia in your home. You have family, social and informal professional connections in Australia.

•         Family ties - You have family in Australia, including your parents and sibling. Your spouse has an elderly parent and other family overseas, whom you were visiting during the ruling period.

•         Business and employment ties - Your professional ties are in Australia. You do not have any professional connections overseas.

•         Maintenance and location of assets - Your personal and household effects are in storage in Australia during your time overseas. In Australia, your assets include your home, joint bank accounts, a managed fund investment and superannuation. Overseas, in Country X, you only have a joint transactional bank account.

•         Social and living arrangements - You had a X-month lease of a rental apartment in Country X. You vacated this apartment on X April 20XX and informed your landlord that you would not renew this lease. You used Country X as your home base overseas while travelling to other nearby countries. In Australia, you own a home that you have rented out during your time overseas. You have friends in Australia, whom you have maintained connections with whilst overseas, and are a member of 2 groups. You do not have any professional, sporting or social connections overseas. You maintained your Australian driver licence while overseas and have kept your name on the electoral roll. You suspended your private medical insurance when departing Australia, however did not inform your Australian financial institutions that you are a foreign resident for tax purposes.

We consider that your domicile is in Australia, and the Commissioner is not satisfied that you have established a permanent place of abode outside Australia. We considered the following factors in forming this conclusion:

•         You intend to return to Australia permanently on XX April 20XX.

•         Your overseas stay is for a fixed duration of less than one year.

•         You have maintained your associations to Australia whilst overseas, including social, family and professional.

You were not in Australia for 183 days or more during the income year ended 30 June 20XX. Therefore, you do not satisfy the 183-day test.

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

Conclusion

You satisfy the resides and domicile tests of residency and so are a resident of Australia for income tax purposes for the year ending 30 June 20XX.