Edited version of private advice

Authorisation Number: 1052174123321

Date of advice: 17 October 2023

Ruling

Subject: Residency

Question

Will you be a resident of Australia for tax purposes for the income year ending 30 June 20xx?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

Following the breakdown of your marriage and the finalisation of the property settlement with your former spouse, you relocated to a country outside of Australia (Country B).

Prior to that time, you had always been always an Australian resident.

You acquired a home in Country B at Property A in your name and you occupy the property with a new life partner (de facto spouse) who is a Country B tax resident.

You intend on remaining in Country B indefinitely and do not currently intend on returning to Australia to live.

You did not visit Australia in the income year ended 30 June 20xx and visited Australia for less than 100 days in the income year ended 30 June 20xx.

You will not intentionally spend more than 90 days in Australia in the current income year ending 30 June 20xx.

You have retained the ownership of assets in Australia, your former main residence at Property B. Property B is occupied by a family member.

You are self-funded and have been for many years. You were not employed prior to leaving Australia.

You have severed your membership of a club and are no longer on the board of another club in Australia. You are now on the board of a club in country B.

In country B, you have done the following:

•         acquired a motor vehicle for personal use

•         acquired a Country B driver's licence

•         fully furnished Property A

•         joined social clubs

•         opened a local bank account

•         lodged tax returns in Country B, and

•         acquired a mooring for a boat.

You have existing friends and other social contacts in Country B.

You have written to the Australian Electoral Commission requesting that your name be removed from the Australian electoral roll.

In addition to cancelling your Australian private health insurance, you have notified Medicare of the change in your residency status.

You advised your local bank and broker of your change of tax residence.

You and your de facto spouse are not contributing members of the Public Sector Superannuation Scheme or the Commonwealth Superannuation Scheme.

As an Australian citizen, you are entitled under Country B law to reside in Country B indefinitely.

You currently do not propose to apply for permanent residence or citizenship of Country B.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 6(1)

Income Tax Assessment Act 1997 Section 995-1(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 tests

•         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 2023/01 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 period 1July 20xx to 30 June 20xx, you are not a resident of Australia as follows.

Considering your individual circumstances, we have concluded that you are not a resident of Australia according to ordinary concepts (the resides test).

We also consider that you may have acquired a domicile of choice in Country B. However, even if this is not the case, the Commissioner is satisfied that your permanent place of abode is outside Australia.

We considered the following factors in forming our conclusion:

•         You have resided in Country B since 20xx

•         You intend to reside in Country B indefinitely and have no current intention of returning to Australia to live.

•         You have acquired a home in Country B, where you and your partner reside.

•         You have established various ties to Country B and have cut various ties with Australia.

You will not be in Australia for 183 days or more during the income year ending 30 June 20xx and are therefore not a resident under this test.

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