Edited version of private advice

Authorisation Number: 1052222101122

Date of advice: 15 February 2024

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes for the 2023 financial year, as defined by subsection 6(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

On XX XX 19XX, you were born in Australia. You continue to be a citizen of Australia.

You are also a citizen of the Country A.

You are an international airline pilot.

Prior to Covid, you lived and worked in Country C.

Your employment in Country C then ceased and you returned to live in Australia.

You were offered a new employment opportunity in Country D.

In early 20XX, for a period of 3 months, you attended self-funded training in City X (Country D).

In XX 20XX, you relocated to City X, Country D on a full-time basis.

You possess a Visa to enter Country D.

On XX XX 20XX, you relocated from City X to City Z in Country D.

You have spent XX days in Australia during the income tax year.

Your address in City Z is (Property A).

Property A is used as your primary address on incoming travel cards.

You are employed by a Country D Company a full-time basis.

You are required to lodge income tax returns in Country D.

Your employer in Country D supplied your Visa.

The Company has offered sponsorship in the future in order for you to obtain permanent Country D residency.

You have a spouse and children whom you support financially.

You own property in Australia (Property B).

Property B was initially an investment property.

Your spouse and children reside at Property B.

Property B is your place of abode when you visit Australia.

You financially support your spouse who has remained in Property B while you work overseas.

In Australia, you have the following assets:

•                     Property B

•                     joint bank account with your spouse

•                     shares account with your spouse.

You are making plans to permanently relocate to Country D.

If you are successful in obtaining permanent residency, your spouse and children will relocate and join you in Country D.

In Country D, you are a member of:

•                     a target shooting club

•                     an Employee mentor for the Local Team in your current job.

You hold a City Z (Country D) driver's licence.

In Country D, you hold the following assets:

•         bank account

•         car

•         household and personal belongings

•         furniture, clothing, computers and bikes

In Country D, you have a bank loan of $X,XXX on your car.

You do not own property in Country D.

You have notified the Australian Electoral Commission, that you have left Australia.

You have not notified your Australian health insurance that you have left Australia.

Your Australian health insurance covers your spouse and children and will remain active until your family permanently accompanies you to Country D.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6(1)

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Detailed reasoning

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, M v. Director-General of Social Security [1985] FCA 201; 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 236... 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 resides test is about 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. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia.

Application to your situation

You are a resident of Australia under the resides test for the 20XX income tax yearbased on the following:

•                     You have an established Australian abode that is available to you, and you stay there when in Australia.

•                     Your spouse and children live in Australia.

•                     Your Australian abode is occupied by your spouse and children.

•                     You financially support your spouse and children.

•                     You maintain Australian property and bank accounts, and you have a share account with your spouse.

•                     You have not notified your private health insurance provider to have your policy suspended or cancelled as you have a family health insurance plan that provides for your spouse and children.

•                     You have not notified any Australian financial institutions, nor any Australian companies with whom you have investments that you are a foreign resident.

Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered.

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 Australia and your domicile of origin is Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country D. You have advised that your employer in the foreign country has offered sponsorship in the future for permanent residency. Presently, you do not yet have the right to reside permanently in Country D. This is because you have not yet actively applied for, nor been issued, a visa that will allow you to remain there indefinitely. You remain in Country D on a renewable resident visa.

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 and is to be determined in light of all the facts and circumstances of each chase.

'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, that is, 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:

•                     In XX 20XX, you relocated to Country D on a full-time basis.

•                     You are renting an apartment where you currently live in City X, Country D.

•                     Your intentions are to seek permanent residency in Country D.

•                     You own a residential property in Australia that is available to you, and you stay there when in Australia.

•                     Your spouse and children live in Australia.

•                     Your Australian abode is occupied by your spouse and children.

•                     You financially support your spouse and children.

•                     You have active bank accounts and private health insurance in Australia.

The Commissioner is not satisfied that your permanent place of abode is outside Australia.

Therefore, you are 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 2023 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

You satisfy the resides and domicile tests of residency and so are a resident of Australia for income tax purposes for the year ended 30 June 20XX.