Edited version of private advice

Authorisation Number: 1052139537721

Date of advice: 17 July 2023

Ruling

Subject: Residency

Question

Are you an Australian resident for tax purposes?

Answer

Yes.

This private ruling applies for the following period:

Year ended XX June 20XX.

The scheme commenced on:

XX July 20XX.

Relevant facts and circumstances

You are a citizen of Country A.

You are currently living in Australia on a working holiday visa.

You have been living in Australia for approximately X years and X months.

You are employed under two concurrently running contracts with two separate companies.

You have been in a de facto relationship since May 20XX.

You have been living together since October 20XX in the same property in Australia.

You intend on staying in Australia for the foreseeable future and have made steps to apply for a more permanent visa.

You play sport for a local sporting club.

Relevant legislative provision

Income Tax Assessment Act 1936 section 6(1)

Summary

It is concluded that you satisfy the 'resides test' and the '183-day test', therefore you are considered a resident of Australia for tax purposes as defined in subsection 6(1) of the Income Tax Assessment Act 1936 ('ITAA 1936').

Detailed Reasoning

For tax purposes, whether you are a resident of Australia is defined by subsection 6(1) of the 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 ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. These definitions have been highlighted in cases as being definitive observations of the meaning of resides (see Viscount LC in Levene v Commissioners of Inland Revenue [1928] AC 217 and Logan J in Stockton v Federal Commissioner of Taxation [2019] FCA 1679).

The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains " home ": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235... [W]here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as " home ", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

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.

Application to your circumstances

We have taken the following facts into consideration when determining whether you meet the resides test:

•         You are a citizen of Country A.

•         You are currently living in Australia on a working holiday visa.

•         You have been living in Australia for approximately X years and X months.

•         You are employed under two concurrently running contracts with two separate companies.

•         You have been in a de facto relationship since May 20XX.

•         You have been living together since October 20XX in the same property in Australia.

•         You intend on staying in Australia for the foreseeable future and have made steps to apply for a more permanent visa.

You are a resident of Australia under the resides test.

Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered.

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).

Application to your circumstances

In your case, you were born in Country A and your domicile of origin is the Country A. You relocated to Australia in 20XX.

It is considered that you did not abandon your domicile of origin in Country A and acquire a domicile of choice in Australia. You are not, at this stage, entitled to reside in Australia indefinitely and while living in Australia, you only hold a working holiday visa. Therefore, you are not a resident of Australia under the domicile test.

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.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Application to your circumstances

You resided in Australia for over 183 days in the 20XX income year. Based on your circumstances, the Commissioner is satisfied that your usual place of abode was Australia, and that you intended to reside in Australia, for that relevant income year.

Therefore, you are a resident of Australia under the 183-day test.

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

You are not a member on behalf of whom contributions are being made to the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test.

Conclusion

You satisfy the 'resides' test and the '183-day' test of residency and are a resident of Australia for income tax purposes for the year ended XX June 20XX.