Edited version of private advice

Authorisation Number: 1052156637017

Date of advice: 18 August 2023

Ruling

Subject: Residency

Question

Did you cease to be an Australian resident for income tax purposes on 25 November 2022?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX X 20XX

Relevant facts and circumstances

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

Australia

You moved to Australia in 20XX.

You resided in Australia until X X 20XX when you permanently relocated to Country B.

Prior to relocating to Country B, you had permanent residence status in Australia.

You resigned from your role at your Australian employer.

You sold your home in Australia.

You have informed Medicare of your non-residency status in Australia.

You have cancelled your Australian Private Health policy.

You previously owned some Australian businesses.

These businesses were wound up and deregistered.

You have disposed of all assets in your personal name in Australia.

You had a margin loan.

You have moved the loan account to Country B.

You have transferred the majority of your wealth in the Australian bank account to your account in Country B.

You cancelled your Australian credit cards.

You only maintain one Australian bank account.

You have informed your bank of your non-resident tax status.

You have cancelled your Australian gym membership.

You sold all of your large or unneeded items.

You took all of your personal items with you when you departed Australia.

You have superannuation previously invested with an Australian Super Fund.

Your Super Fund has predominately only received employer contributions.

You have not made any contributions to the superannuation account since departing Australia.

You are not a member of a superannuation scheme established under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976.

Country B

You are residing in Country B under an Employment Pass.

The Country B Employment Pass allows you to reside in Country B for up to X years with an option to be renewed for an additional X years on an ongoing basis.

You intend to renew your Employment Pass at the end of the initial X-year period for at least another X years.

If you are not successful in extending your Employment Pass or obtaining another form of Visa which allows you to remain in Country B, you will likely move back to Country A.

You accepted an employment position at a business in Country B.

Your contract with the Country B business is indefinite.

You have passed the probationary period.

You have established a new home in Country B.

You engaged an interior designer and commenced works to renovate the Country B property.

You have purchased a number of new furnishings for the Country B property.

You have updated all your postal addresses to your new home address in Country B.

You have set up a Country B bank account and debit card.

The majority of your family resides in Country A or Country B.

You have joined a club in Country B.

You have signed up for private health insurance in Country B.

You have signed up to a new gym in Country B.

You expect to return to Australia occasionally to visit friends.

You will stay in hotels and will have no accommodation permanently available to you.

Since departing Australia, you have returned to Australia once for a friend's wedding.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

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, from X 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. We considered the following factors in forming our conclusion:

•                     You are residing in Country B under an Employment Pass.

•                     The Country B Employment Pass allows you to reside in Country B for up to X years with an option to be renewed for an additional X years on an ongoing basis.

•                     You resigned from your role as Principal at your Australian employer.

•                     You accepted an employment position with a Country B based firm.

•                     You sold your home in Australia.

•                     You have established a new home in Country B.

•                     You have informed Medicare of your non-residency of Australia.

•                     You have cancelled your Australian Private Health policy.

•                     You took all of your personal items with you when you departed Australia.

•                     Your Australian business entities have been wound up.

You were not in Australia for 183 days or more during the 2023 income year. Your usual place of abode is outside Australia.

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

You are considered a non-resident of Australia for taxation purposes effective form 25 November 2022 and for the income year ended 30 June 2023.