Edited version of private advice

Authorisation Number: 1052138773307

Date of advice: 12 July 2023

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No.

This private ruling applies for the following period:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

The scheme commenced on:

X July 20XX

Relevant facts and circumstances

You, your spouse and children are all permanent residents of foreign country A. You are all citizens of foreign country B.

Your children were raised and educated in foreign country A. One child was born in foreign country A. Others were born in foreign country B. One child is an adult and lives and work in foreign country A and resides with you there. Your intention was always to live in foreign country A until all your children reach adulthood at which point you would move to foreign country B to retire.

All this changed during the last few years as foreign country A closed its borders due to Covid. There was also social unrest. You are employed in foreign country A by a business of which you are part owner. Your entire financial life and security are built around your work in foreign country A. However, you realised that you could not allow your younger children to live in this environment any longer since they were so unsettled by the departure of everyone they ever knew in foreign country A.

After considering options, you looked at Australia. This made the most sense since you could easily fly from foreign country A, as there is only a X-hour time difference, so your health would not be affected by jetlag. Australia is also a similar environment the children are used to. In addition, they had friends and teachers who had moved to Brisbane from foreign country A. The cost of flying to visit them would also be much more reasonable than other options you had considered.

You flew into Australia on X January 20XX to get the children settled before school started. Your spouse rented a property in her name near the school and you had to get the children used to their new environment and routine. You spent some time holidaying at this time while getting the children settled before your return to foreign country A for work.

The children have been at school in Australia since January 20XX.

You will make periodic trips to Australia to visit your spouse and children. These visits will be less than 183 days, due to your work commitments in foreign country A.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Summary

You are not a resident of Australia for taxation purposes.

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, 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 2023/1 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 period X July 20XX to XX June 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 not in Australia.

You will not be in Australia for 183 days or more during the any of the income years of the ruling.

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