Edited version of private advice

Authorisation Number: 1052175697248

Date of advice: 11 October 2023

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes from when you left Australia in April 20XX?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 June 20XX

Relevant facts and circumstances

You were born in Country A and are an Australian and Country B citizen.

You moved to Australia in 20XX and your Australian citizenship was granted in 20XX.

You have a spouse and a pet, and you all left Australia in April 20XX to go to work in Country C.

You have a contract with your current employer for a XXX-year period which can be extended.

When you left Australia, you moved all your belongings to Country C and rented your family home.

Your spouse intends to return to Australia, with the pet in 20XX due to health reasons and have to await import permits and quarantine requirements for your pet to be able to do this.

You are going to stay in Country C and continue to work there for at least XXX years.

You plan to visit Australia once a year to see your spouse. However, at this stage there is no plan in place to visit Australia

Your family home is rented until April 20XX, when your spouse will move back in.

The family home is owned jointly with your spouse.

You have a residency Visa issued by Country C for XX years, this is based on employment contracts and will need to be renewed/extended.

You decided to make your permanent home outside of Australia in 20XX and do not plan to return to Australia to live within the next XXX years.

You have a place of residence in Country C, which you have signed a rental lease agreement for.

You have opened a bank account and leased a motor vehicle in Country C.

You have property assets in Australia, the investment property is rented, and you spouse will be residing in the principal place of residence from April 20XX.

You receive rental income from properties in Australia.

You and your spouse were not Commonwealth Government of Australia employees for superannuation purposes.

You have advised the Australia Electoral role to remove your name. However, you will need to notify Medicare.

You have advised your Australian financial institutions that you are a foreign resident so that non-resident withholding can be charged.

You have suspended your health insurance for XXX years.

You had no Capital Gain event happen to your assets when you ceased to be an Australian resident.

You have a personal training membership in the Country C.

Your employment income is paid into your bank account in Country C.

You will not be financially supporting your spouse when they return to Australia.

Your spouse will be undertaking full time employment when they return to Australia.

You are not contributing to your Australian superannuation from your employment in Country C.

You are not placing any monies from your employment in Country C into an Australian savings or investment account.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Overview of the law

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 '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 each individual taxpayer is a resident of Australia for income tax purposes. These tests are:

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

•                     the domicile test

•                     the 183-day test, and

•                     the Commonwealth superannuation fund test.

The resides test is the primary test for deciding the residency status of an individual. This test considers whether an individual resides 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 (the domicile test, 183-day test and Commonwealth superannuation fund test).

Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals.

We have considered the statutory tests listed above in relation to your situation as follows:

The resides test

The ordinary meaning of the word 'reside' 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': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235... [W]here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:

•                     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.

It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances.

Because the ordinary concepts test is whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia: Logan J in Pike v Commissioner of Taxation [2019] FCA 2185 at 57 reminds us that 'it is no part of the ordinary meaning of reside in the 1936 Act that there be a "principal" or even "usual" place of residence. ... It is important that ... "resident" not be construed and applied as if there were such adjectival qualifications.' For this reason, the test is not about dominance or exclusivity.

Application to your situation

We have taken the following into consideration when determining whether you meet the resides test:

•                     You, your spouse and pet left Australia XX April 20XX for you to go and work in Country C

•                     You have a contract with your current employer for a XXX-year period which can be extended.

•                     When you left Australia, you moved all your belongings to Country C and rented your family home

•                     You are going to stay in Country C and continue to work there for at least XXX years. You decided to make your permanent home outside of Australia in December 20XX and do not plan to return to Australia to live within the next XXX years.

•                     You have suspended your health insurance for XXX years

•                     You have opened a bank account and leased a motor vehicle in Country C.

You are not a resident of Australia under the resides test for the period XX April 20XX to XX June 20XX.

You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test).

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 in 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 a domicile of dependence or have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and 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.

Application to your situation

In your case, you were born in Country A and your domicile of origin is Country A. You subsequently immigrated to Country B and became a citizen of Country B. You then immigrated to Australia in late 20XX and became a citizen in 20XX.

From the information provided, it is considered that you acquired a domicile of choice in Australia and your domicile will not change while you are in the Country C.

Therefore, your domicile is Australia.

Permanent place of abode

If you have an Australian domicile, you are an Australian resident unless the Commissioner is satisfied that your permanent place of abode is outside Australia. This is a question of fact to be determined in light of all the facts and circumstances of each case.

'Permanent' does not mean everlasting or forever, but it is to be distinguished from temporary or transitory.

The phrase 'permanent place of abode' calls for a consideration of the physical surroundings in which you live, extending to a town or country. It does not extend to more than one country, or a region of the world.

The Full Federal Court in Harding v Commissioner of Taxation [2019] FCA 29 held at paragraphs 36 and 40 that key considerations in determining whether a taxpayer has their permanent place of abode outside Australia are:

•                     whether the taxpayer has definitely abandoned, in a permanent way, living in Australia

•                     whether the taxpayer is living in a town, city, region or country in a permanent way.

The Commissioner considers the following factors relevant to whether a taxpayer's permanent place of abode is outside Australia:

(a)          the intended and actual length of the taxpayer's stay in the overseas country;

(b)          whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c)           whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia.

(d)          whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence.

(e)          the duration and continuity of the taxpayer's presence in the overseas country; and

(f)            the durability of association that the person has with a particular place in Australia, i.e. maintaining assets in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

As with the factors under the resides test, no one single factor is decisive, and the weight given to each factor depends on the individual circumstances.

Application to your situation

We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia:

•                     You, your spouse, and pet left Australia XX April 20XX for you to go and work in Country C

•                     You have a contract with your current employer for a XXX-year period which can be extended.

•                     When you left Australia, you moved all your belongings to Country C and rented your family home

•                     You are going to stay in Country C and continue to work in Country C for at least XXX years. You decided to make your permanent home outside of Australia in December 20XX and do not plan to return to Australia to live within the next XXX years.

•                     You have a place of residence in Country C which you have signed a renting lease agreement for.

•                     You opened a bank account and leased a Motor vehicle in Country C.

•                     Your employment income is paid into your bank account in Country C.

•                     You have a residency Visa issued by Country C for XX years, this is based on employment contracts which will need to be renewed/extended.

The Commissioner is satisfied that your permanent place of abode is outside Australia.

Therefore, you are not a resident of Australia under the domicile test.

183-day test

Where a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that both:

•                     the person's usual place of abode is outside Australia, and

•                     the person does not intend to take up residence in Australia.

Application to your situation

You were in Australia for 183 days or more in the 20XX income year. Therefore, you will be a resident under this test unless the Commissioner is satisfied that your usual place of abode was outside Australia, and you do not have an intention to take up residence in Australia.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live and can include a dwelling or a country. 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 case for a 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, we will 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.

Application to your situation

We have taken the following into consideration when deciding whether your usual place of abode was outside of Australia as at XX June 20XX:

•                     You, your spouse, and pet left Australia XX April 20XX for you to go and work in Country C

•                     You have a contract with your current employer for a XXX-year period which can be extended.

•                     When you left Australia, you moved all your belongings to Country C and rented your family home

•                     You have a personal training membership in the Country C.

•                     You have a place of residence in Country C.

•                     You have no social or sporting connections to Australia.

•                     You are or will be making financial investments in Country C.

Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia and you did not intend to take up residence in Australia as at the end of the 20XX income year.

You will not be in Australia for over 183 days in the 20XX and 20XX income years.

Therefore, you are not a resident 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.

Application to your situation

You are not a member on behalf of whom contributions are being made to 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.

Therefore, you are not a resident under this test.

Conclusion

You do not satisfy any of the tests for residency and so you are not a resident of Australia for tax purposes from when you left Australia.