Edited version of private advice

Authorisation Number: 1052124058564

Date of advice: 30 May 2023

Ruling

Subject: Residency

Question

Am I an Australian resident for taxation purposes for the period from XX XXX 20XX to XX XXX 20XX?

Answer

Having considered your circumstances and the relevant factors, the Commissioner is satisfied that you are not a resident of Australia for income tax purposes from XX XXX 20XX until XX XXXX 20XX.

This ruling applies for the following periods:

Year ended 30 June 2022

Year ending 30 June 2023

Year ending 30 June 2024

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Australia. Your country of origin is Country A.

Prior to leaving Australia, you had lived in a rented flat share in City A for several years. However, you ended up in City B living with your parents, unable to return to City A during COVID.

You departed Australia for Country B in 20XX.

After arriving in Country B, you started a full-time job in City C in 20XX.

You are employed by Company A and your employment is ongoing.

You live in a flat share in City C. The lease for this flat is ongoing and can be terminated at short notice.

Prior to this, you lived in another flat share in City C for several months.

Since moving to Country C, you have visited Australia on limited occasions for short periods each time.

You have no investments or ownership interest in cars or properties outside of Australia.

You have left your household effects with your parents in City B.

You have $XX,XXX in Country C dollars in a bank account in Country B.

You own properties in Australia, from which you are earning rental income.

You have a bank account in Australia.

You do not have private health insurance in Australia.

You have been dating a Country B citizen for the past year and have no dependants.

You have friends in City A and City B and family in City B.

You remain on Australia's Electoral roll and vote by post.

You submitted an income tax return for the year ending XX XXX 20XX in Country B.

On your outgoing passenger card, you stated that your reason for visiting Country B was to work.

Assumptions

You will remain in Country B until XX XXXX 20XX.

You may travel to Australia for short periods of time before that date

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Summary

Having considered your circumstances and the relevant factors, the Commissioner is satisfied that you are not a resident of Australia for income tax purposes from XX XXXX 20XX until XX XXXX 20XX.

Detailed reasoning

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

•         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 accommodation

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 a spouse, or the child under 16, of such a person.

Application to your circumstances

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.

We have considered each of the statutory tests listed above in relation to your particular facts and circumstances.

We conclude that, for the period on and from XX XXXX 20XX until XX XXXX 20XX, you are not a resident of Australia according to ordinary concepts.

We also consider that your domicile is in Australia. However, the Commissioner is satisfied that your permanent place of abode is outside Australia, in Country B. We considered the following factors in forming our conclusion:

•         You relocated to Country B on XX XXXX 20XX to commence employment in a permanent position in your chosen field.

•         You live in a flat share in City C. The lease for this flat is ongoing and can be terminated at short notice.

•         In Australia, you own properties. However, these properties are rented and not available to you to occupy

•         You have a partner in Country B and although you have family and friends remaining in Australia you have no dependants there

•         You have travelled to Australia for short periods since arriving in Country B for holidays only

•         You have an amount of money in a bank account in Country B and one bank account in Australia.

•         You have no other assets

•         You have minimal personal belongings which are stored at your parents' house in Australia.

You were in Australia for 183 days or more during the income ending 30 June 20XX. However, on or from XX XXXX 20XX to 30 June 20XX:

•         The properties you own in Australia were being rented and were not available to you

•         You did not have any intention to take up residency in Australia during this period

•         You had moved to Country B to take up permanent employment in your chosen field

•         You have minimal personal belongings which have been stored at your parents' house in City A

•         Your settled lifestyle in Country B demonstrates that you do not have a usual place of abode in Australia and the Commissioner is satisfied that your usual place of abode has become your flat share accommodation at City C.

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