Edited version of private advice

Authorisation Number: 1052193743065

Date of advice: 16 November 2023

Ruling

Subject: Residency

Question

Did you cease to be an Australian resident for tax purposes from XX/XX/20XX?

Answer

Yes.

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 Country X and are a citizen of Country X.

You have a spouse and two dependent children.

Your spouse is an Australian citizen.

Your spouse is currently residing in the Country X on Visa A. Your spouse has sought Visa B in the Country X using their Australian passport and intends to apply for permanent residency in the coming months when they are eligible to do so.

Whilst you were working in your chosen profession in Australia, you worked for several different employers.

You undertook some business projects in Australia with your family and unrelated business associates.

You lived in Australia from 20XX until 20XX.

You became an Australian citizen in 20XX.

You own an apartment in Australia and whilst you were living in Australia you resided there with your family.

This apartment continues to be available for your own use. You intend to retain ownership of this property for the benefit of your children if they decide to attend university in Australia and for the benefit of your extended family and friends to use so that they have a place to stay when they visit Australia.

On XX/XX/20XX, you returned to Country X permanently with your family at the request of your father to take up employment in the family business. Your relative started the family business, and your family are the largest shareholder and are actively involved in managing and operating the group.

You did not intend to return to Australia.

You returned to Australia for a period in XX/20XX with your spouse to finalise packing.

You returned to Australia for a period in XX/20XX with one of your dependent children and your parents to attend an event.

You were advised by your tax advisor in Country X that you commenced being a resident of Country X from XX/XX/20XX. You lodged your Country X tax return for the year ending XX/XX/20XX on this basis.

You have several Australian bank accounts and you have notified them that you ceased to be an Australian resident from the date you departed Australia.

You have an Australian credit card.

You have an Australian driver's licence.

You sold your vehicle prior to departing Australia.

You have Medicare.

You remain on the Australian electoral roll; however, you have lodged an overseas notification with the Australian Electoral Commission to remove your name.

You have an Australian superannuation fund; however, no contributions have been made since you departed Australia.

You have health insurance with an Australian provider; however, you are currently in the process of terminating your policy as it does not provide overseas cover for you and your family.

You have shares in four Australian property-owning entities.

You did not belong to any social or sporting clubs whilst in Australia.

When you relocated to the Country X, you resided in a property there that is owned by your parent. You did not pay for rent, however you paid for all outgoings associated with the property. The property was available for you and your family's use.

You have since purchased a home in Country X which you now reside in with your family.

Your parents and your three siblings live in Country X.

Your extended family lives in Country X.

You have relocated all your personal belongings to Country X.

You joined a golf club in Country X.

You were appointed as a director of a golf club in Country X.

You joined a beach and country club in Country X.

You renewed your driver's licence in Country X.

You have bank accounts in Country X.

You have credit cards in Country X.

You purchased a vehicle in Country X.

You have shares in six property owning entities in Country X.

You intend to travel in the Australia in the near future for a short period for a holiday and to check on investments. You also intend to travel to Country Y and Country Z for short holidays.

For future visits to Australia, you will complete incoming passenger cards as a visitor or temporary entrant.

When entering Country X, you now state that you are a returning resident.

In Australia, you were registered with Organisation A, however your registration was discontinued when you left.

You receive some of your mail in Country X and receive some of mail at your Australian address. Any important mail is redirected to your address in Country X.

You are not a Commonwealth of Australia Government employee for superannuation (super) purposes.

You are not a member nor the spouse of a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision

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 Draft 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 departed Australia to live in Country X permanently.

•         You are a citizen of Country X.

•         After you returned to Country X, you travelled to Australia several times for a period.

•         You intend to visit Australia in the future only for short holidays.

•         You took your personal belongings with you to Country X.

•         Your spouse and your family accompanied you to Country X.

•         You do not intend to return to Australia to live permanently.

•         You purchased a home for you and your family to reside in Country X.

•         You have bank accounts in Country X.

•         You joined a beach and country club and a golf club in Country X.

•         Your parents, siblings and extended family all live in Country X.

You are not a resident of Australia under the resides test for the year ending XX/XX/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

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 X and your domicile of origin is Country X. You immigrated to Australia in 20XX and became an Australian citizen in 20XX. Your domicile of origin then changed from Country X to Australia.

When you returned to Country X to live permanently, it is considered that you abandoned your domicile of origin in Australia and acquired a domicile of choice in Country X.

Therefore, your domicile is Country X, and 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 have not been present in Australia for 183 days or more during the 20XX income year. 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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the year ended XX/XX/20XX.