Edited version of private advice

Authorisation Number: 1052164655601

Date of advice: 5 September 2023

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes from the relevant date?

Answer

No.

Question 2

Is your income derived in the Country Z assessable in Australia?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2022

Year ended 30 June 2023

Year ending 30 June 2024

The scheme commenced on:

1 July 2021

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You left Australia to start a permanent indefinite posting with your Australian employer in Country Z.

Your employer is registered as a foreign withholding agent in Country Z.

Your Australian employer was happy for you to work remotely.

You are on a permanent employment contract with no fixed term.

You have a spouse who is of Country Z origin, and you have no children so you felt it would be a great opportunity to explore and see what life outside of Australia is like.

Your spouse has relocated with you.

You and your spouse have leased an apartment in Country Z to reside with an initial term of a couple of years that commenced in the month after your departure.

You do not own or have a lease interest in any Australian dwelling.

For domestic income tax purposes of Country Z, you are considered a tax resident.

You have visited Australia for a number of weeks earlier this year.

You stayed with your parent when you returned to Australia.

Your mail will be sent to your parent's address in Australia while you are overseas.

You have maintained Australian bank accounts.

For the majority of the previous year, since your departure, your salary was paid into your Australian bank account, and you set up regular payment transfers to your Country Z bank account. At the end of the year this practice stopped, and your salary commenced to be paid directly into your Country Z bank account.

You use your Country Z bank account for your day to day living expenses.

You took all your belongings overseas with you.

You do not have a private health policy in Australia.

You are in the process of obtaining your Country Z drivers' licence.

You do not intend on being in Australia for more than 183 days in the next income year.

You and your spouse are not eligible to contribute to the PSS or the CSS Commonwealth Superannuation funds.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Question 1 and 2

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 relevant period 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 as you have a permanent place of abode in Country Z.

We considered the following factors in forming our conclusion:

You have gone to Country Z to work and experience life in Country Z.

•                     Your spouse has relocated to Country Z with you.

•                     You are working for an Australian employer in Country Z on a permanent indefinite contract.

•                     You are renting accommodation in Country Z.

•                     You do not have any property in Australia.

•                     You will not be in Australia for more than 183 days in the relevant income year.

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

You will not be a resident of Australia for taxation purposes for the relevant years.

As you are not a resident of Australia for the aforementioned period, your income will not be assessable in Australia under the Double Tax Agreement between Australia and Country Z.