Edited version of private advice

Authorisation Number: 1052141975979

Date of advice: 17 July 2023

Ruling

Subject: Residency

Question

Are you an Australian resident for taxation purposes?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Country X and are a citizen of Country X.

You arrived in Australia with your spouse over XX years ago. You and your spouse applied for permanent residency in Australia while your spouse was pursuing her studies.

From 20XX to 20XX, you, your spouse and daughter resided in Country X.

From 20XX, you, your spouse and daughter relocated to Australia to enable your daughter to pursue studies in Australia.

The number of days you spent in Australia from the 20XX to 20XX income years was:

•         20XX: 103 days

•         20XX: 107 days

•         20XX: 138 days

•         20XX: 157 days

•         20XX: 134 days

You have continued to work in Country X. You have been employed by the same company since 20XX.

You hold an Australian immigration visa and have a Resident Return Visa (RRV) subclass 155 which was issued in 20XX and granted for 5 years.

Information about the RRV subclass 155 on the Australian Government Department of Home Affairs (Home Affairs) website states:

If you leave Australia after your travel validity expires, or it expires when you are outside Australia, you will not be able to return to Australia as a permanent resident. This visa allows you to return as a permanent resident.

With this visa, you can:

•         Travel in and out of Australia as many times as you want until the travel validity expires

You must be either:

•         an Australian permanent resident

•         a former Australian permanent resident whose last permanent visa was not cancelled, or

•         a former Australian citizen who lost or renounced citizenship

You have stated that you were required to change your visa to subclass 155 due to a legal requirement from Home Affairs. This requirement stemmed from the fact that you had stayed in Australia for more than two years within the previous five-year period due to COVID-related travel restrictions.

On the Home Affairs website, to obtain a RRV subclass 155 with a 5-year travel facility you must:

•         have been present in Australia for 2 years in the last 5 years as the holder of a permanent visa (or permanent entry permit), or as an Australian citizen

In calculating the residence requirement relating to the point above, the:

•         2-year period is counted as 730 days

•         5-year period is counted back from the RRV application lodgement date (not from the date of RRV decision)

You have stated you only stayed in Australia for more than two months on one other occasion, which was during the COVID-19 outbreak.

When returning to Australia, you declare on your incoming passenger cards that you are a 'Resident returning to Australia', with your reason for travel being 'employment'.

You have stated that all of your business activities and social networks are in Country X, and you have a family member that lives in Country X and needs your care.

When you are in Australia you stay at the family home. Your spouse is the owner of the family home and other assets in Australia.

Your spouse does not work, and you support her and your daughter financially. Your spouse has access to a subsidiary credit card that is linked to your Country X credit card which is used for daily expenses.

The family home and other assets that your spouse has accumulated were acquired through a combination of previous savings and investment proceeds from Country X, as well as your employment contribution.

You are responsible for paying the utility bills, strata and ongoing mortgage payments for the family home.

The mortgage repayments are paid through a joint bank account and the loan for this property was approved by the bank based on your salary income.

Your spouse and daughter moved to Australia for your daughter's education.

You have been visiting them during school holidays while spending the rest of the time working in Country X.

You have stated that it has always been your intention to reside in Country X.

During the year ended 30 June 20XX you spent 210 days in Australia.

During the income year ending 30 June 20XX you spent a total of 207 days in Australia.

You have stated that the reason for your stay in Australia was to visit your spouse and daughter.

While you were in Australia, during the period you were working remotely for your employer.

You have advised that your job responsibilities require you to work onsite.

During lockdown periods you had to rely predominantly on emails and phone calls as limited resources to carry out your daily tasks. This significantly impacted your work performance.

You have an Australian Medicare card.

You have Private health Insurance.

You hold various assets and financial investments in both Australia and in Country X.

In Australia you hold the following:

•         a Motor Vehicle

•         an Australian drivers licence.

•         a joint bank account and;

•         an individual bank account.

You have set up Family Trust (the Trust). You have stated the Trust was established with the intention of safeguarding the future of your daughter. You state that there is no activity and no concrete plans in place regarding specific actions related to the Trust.

In Country X you hold 3 properties and 2 bank accounts.

When you are in Australia, one property is occupied by a family member, and you are able to stay in this property when you return to Country X.

One property remains unoccupied while you are in Australia and the other is intended to be used as a holiday home and remains unoccupied at present.

You lodge tax returns in Country X which reflect your residency status.

You are not a contributing member of 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.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(1)

Domicile Act 1982.

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms of resident and resident of Australia, as applied to an individual, are defined in subsection 6(1) of the ITAA 1936.

The definition offers four tests to ascertain whether an individual taxpayer is a resident for income tax purposes. These tests are:

•         the resides test (also referred to as the ordinary concepts test)

•         the domicile tests

•         the 183-day test, and

•         the superannuation tests.

You are a resident if you meet any one of these tests. It does not matter if you do not meet the others.

The primary test for deciding the residency status of an individual is whether they reside in Australia according to the ordinary meaning of the word resides.

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.

Ordinary concepts test

Taxation Ruling TR 2023/1 Income tax: residency tests for individuals outlines the residency tests for individuals for tax purposes as set out in subsection 6(1) of the ITAA 1936. Paragraphs 17 to 20 of TR 2023/1 state:

17. Under the ordinary concepts test, you are a resident if you reside in Australia.

18. The term 'reside' is not defined in the Australian income tax law and has its ordinary meaning.

19. The ordinary meaning has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place'.

20. The ordinary concepts test is asking whether your presence in Australia is usual and settled in contrast to temporary and casual. This is informed by both the nature, duration and quality of the person's physical presence and an intention to treat Australia as home. Factors that commonly inform the relevant association with Australia are:

•         period of physical presence in Australia

•         intention or purpose of presence

•         behaviour while in Australia

•         family, and business or employment ties

•         maintenance and location of assets, and

•         social and living arrangements.

It is important to note that not one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

Period of physical presence in Australia

You were born in Country X and a citizen of Country X.

You arrived in Australia with your spouse over XX years ago. You and your spouse applied for permanent residency in Australia while your spouse was pursuing her studies.

From 20XX to 20XX, you, your spouse and daughter resided in Country X.

From 20XX, you, your spouse and daughter relocated to Australia to enable your daughter to pursue studies in Australia.

In the income years ending 30 June 20XX and 30 June 20XX you were physically present in Australia for 210 and 207 days respectively.

You were planning to fly to Country X, however, your flight was cancelled due to a COVID outbreak.

Subjective intention is not decisive and its significance and weight will depend on the circumstances. Weight must be given to your objective circumstances surrounding your arrival or departure. This includes what pre-existing arrangements you had, what you take with you and what you leave behind.

Intention or purpose of presence

From 20XX, you, your spouse and daughter relocated to Australia to enable your daughter to pursue studies in Australia.

You have continued your employment for a company based in Country X during this time.

You state your reason for returning to Australia is to visit your spouse and daughter.

You return to Australia to visit your spouse and daughter regularly and stay in the family home, owned by your spouse, during this time. You provided the funds for the purchase of the house and your spouse's assets in Australia. You continue to fund all outgoings and expenses in relation to these assets.

You fund all of your spouse's and your daughter's living expenses.

You hold a RRV subclass 155 which was issued in 20XX and granted for 5 years. You were granted this visa on the basis that you had been present in Australia for 2 years in the last 5 years as the holder of a permanent visa, or as an Australian citizen.

This visa allows you to travel in and out of Australia as many times as you want until the travel validity expires.

When returning to Australia, you declare on your incoming passenger cards that you are a 'Resident returning to Australia', with your reason for travel being 'employment'.

You state that your intention was not to remain in Australia for extended periods during the income year ending 30 June 20XX. However, you were unable to return to Country X earlier due to COVID restrictions.

You have stated that your intention is to continue to reside in Country X. You have assets and an elderly family member living there.

You have stated that all of your business activities and social networks are in Country X.

Behaviour while in Australia

While in Australia you reside in the family home owned by your spouse, that you have financed and pay for.

You, your spouse and daughter relocated to Australia in 20XX to enable your daughter to pursue studies in Australia.

You own a car in Australia, have a Medicare card and maintain Australian private health insurance.

While in Australia you are able to carry out your employment obligations to your overseas employer remotely.

Some individuals work in a number of countries during their careers. They often maintain a house in their country of domicile.

Although these individuals regard themselves as permanently resident in their home country or may be regarded as residents of their home country for its tax purposes, their behaviour while in Australia may mean they are also residing here for Australian income tax purposes.

In your circumstances, although you were unable to leave the country due to COVID restrictions, you were in Australia to visit your family for more than 200 days during the income year. This factor suggests you were in Australia in a manner that is consistent with you residing here.

Family, and business or employment ties

Your spouse and daughter reside in Australia.

You work for an overseas company.

While in Australia you were able to carry out your employment obligations to your overseas employer, for your role based remotely.

Your elderly relative lives in Country X.

In the 20XX year you had a deliberate connection to Australia as well as Country X. This connection does not make you a mere visitor in Australia, rather Australia was your home and you were properly regarded as residing here.

Maintenance and location of assets

You have and maintain assets and significant funds in your bank accounts overseas.

You have a car and maintain significant funds in your Australian bank accounts.

Although don't own any real estate in Australia you have a financial interest in the family home and your spouse's accumulated assets, as you have financed their purchase. You also finance all of your spouse's outgoings, including their mortgage, living and other expenses associated with the family home and accumulated assets.

Social and living arrangements

You reside in the family home with your spouse and daughter when you are in Australia.

When you are in Australia, your Country X property is occupied by your elderly relative and you are able to stay in this property when you are in the Country X.

You state you have caring responsibilities for your elderly relative in Country X.

One property remains unoccupied while you are in Australia.

One property is intended to be used as a holiday home and remains unoccupied at present.

Weighing up all of these factors we consider that your circumstances are consistent with you residing in Australia according to ordinary concepts.

Conclusion

On balance when considering all of the relevant factors, you were 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.

Domicile test

Under the domicile test, you are a resident of Australia if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Domicile

Whether your domicile is Australia is determined by the Domicile Act 1982 and the common law rules on domicile.

Your domicile is your domicile of origin (usually the domicile of your father at the time of your birth) unless you have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and you must hold the positive intention to make that country your home indefinitely.

Your domicile continues until you acquire a different domicile. Whether your domicile has changed depends on an objective consideration of all relevant facts.

You were born in Country X and you are a citizen of Country X.

You were not a resident under this test.

183-day test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia, and the person does not intend to take up residence in Australia.

You were in Australia for 207 days in the 20XX income year. We now need to consider whether we are satisfied that, during the 20XX income year, your usual place of abode was outside Australia and your intention was to take up residence in Australia.

In the context of the 183-day test, a person's usual place of abode can include both a dwelling or a country where the person usually resides. 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 person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, it is necessary to examine the nature and quality of the use which the person makes of each particular place of abode.

It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode (Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836).

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts.

In respect of the usual place of abode this takes into account the following:

• you spent 207 days in Australia during the income year ending 30 June 20XX
• your spouse and daughter live in Australia where your daughter is completing her education
• you resided at the home where your spouse and daughter live and did not have the intention to leave Australia till March 20XX
• you hold Australian banks accounts with significant account balances
• you have set up an Australian resident family trust with your spouse.
• you hold an Australian Medicare card
• you have private health insurance
• you have a driver's licence and a vehicle
• you have been able to continually work for your employer remotely in Australia to meet your employment obligations.
• your visa subclass 155 allows you to return as a permanent resident and on your entry cards to Australia declarations are 'Resident returning to Australia'
• you pay property expenses and you are responsible for paying the utility bill and Strata for the property you reside in Australia
• you pay the mortgage payments for the property you, your wife and child reside in Australia and legally responsible for these mortgage repayments
• when exiting Australia, your exit cards state the reason for staying overseas is 'employment'
• when entering Australia, your entry card declaration states that you are a 'Resident returning to Australia'.

In considering these factors, the Commissioner is not satisfied that your usual place of abode was outside Australia, and you did not intend to take up residence in Australia. Therefore, you were a resident of Australia under this 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.

You and your spouse are not a contributing member of 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.

You were not a resident under this test.

Conclusion

You satisfy the Resides and 183-day tests of residency, as a result you were a resident of Australia for income tax purposes for the income year ended 30 June 20XX.