Edited version of private advice

Authorisation Number: 1052164096237

Date of advice: 7 August 2023

Ruling

Subject: Residency

Question

Will you cease to be a tax resident of Australia on XX July 20XX at the time you relocate to Country A?

Answer

Yes.

This ruling applies for the following periods:

Year ending XX June 20XX

Year ending XX June 20XX

Year ending XX June 20XX

The scheme commences on:

X July 20XX

Relevant facts and circumstances

You are an Australian citizen and are eligible to obtain a Country A passport.

You will leave Australia on X June 20XX and will arrive in Country A permanently on XX July 20XX.

You have travelled on a one-way ticket.

You have incorporated two Limited Liability Companies in Country B to operate your businesses under.

You intend to relocate to Country A for a period of greater than 10 years.

You are in the process of obtaining his Country A passport. You have applied for a temporary visa in Country A which is renewable indefinitely every 12 months and is a pathway to permanent residency.

You will spend limited time in Australia following your relocation to Country A. It is anticipated you will spend less than 30 days in Australia per income year.

You will initially stay with your close friend in Country A on a long-term lease.

You do not own property in Australia. You terminated your rental lease in Australia.

You do not have a spouse or children.

You have shipped your personal possessions to Country A.

You have informed all relevant Australian financial institutions of your relocation to Country A.

You have informed Medicare of your relocation to Country A.

You have informed the Australian Electoral Commission of your relocation to Country A.

You are no longer a member of any social or sporting clubs in Australia.

You don't own a motor vehicle.

Except for some cash savings and superannuation, you don't own other assets or investments in Australia.

You are a beneficiary of a Family Trust in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

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.

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 XX June 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 in Australia, and the Commissioner is satisfied that your permanent place of abode is outside Australia. We considered the following factors in forming our conclusion:

•         Your duration of intended presence in Country A is a period of 10 years or longer.

•         You have entered a long-term rental lease in Country A.

•         You have shipped your possessions to Country A.

You will not be in Australia for 183 days or more during the 20XX to 20XX income years.

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

Conclusion

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes from XX July 20XX to XX June 20XX.