Edited version of private advice

Authorisation Number: 1052263972947

Date of advice: 5 July 2024

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are not a citizen of any other country.

You have been employed by Company A since Date 3.

You departed Australia for Country A on Date 4.

You are currently employed by Company A in Country A.

The length of your contract is X years.

You have recently discussed extending your contract with your manager but have not made the decision to do so as yet.

You have provided a list of countries you have travelled to and dates on which you have travelled since Date 5.

Going forward, you will likely visit Country B and Country C, with trips to Australia every few months.

You are a resident of Country A for tax purposes on the basis that you currently live and work there.

You have a visa that allows you to stay in Country A for X years.

Your visa was supplied by your employer.

You partially financially support your spouse.

You play golf in Country A.

You are an away member of a sports club in Australia.

You have a driver's licence in Australia and Country A.

You do not have any family members in Country A.

Your parents and siblings live in Australia. You do not have any dependants.

When you left Australia, you did not inform the Australian Electoral Commission or Medicare that you were departing.

When you left Australia, you did not advise your private health insurance provider to cancel or suspend your policy.

You have a property (Property A) that you reside at with your spouse when in Australia. When you return to Australia, you stay at Property A with your spouse.

Due to their work commitments, they have remained living at Property A in Australia.

You reside in rental accommodation at Property B when in Country A. Your employer does not pay for your accommodation.

When completing your incoming and outgoing passenger cards, you state your address as Property B.

While in Country A, you continue to pay the mortgage on Property A.

You have the following assets in Country A:

•         A bank account

You have the following assets in Australia:

•         A home at which you reside with your spouse when in Australia (Property A)

•         An investment property (Property C)

•         An investment property (Property D)

•         Bank A bank account

•         Bank B bank account

•         Bank C Geared Investment.

When you travelled to Country A, you kept your personal effects at Property A.

You get your mail sent to Property B in Country A.

Neither you nor your spouse are or have ever been a Commonwealth of Australia Government employee for superannuation purposes.

You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1976.

You are not an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

You are not the spouse of a person who is a member of the PSS or an eligible employee in respect of the CSS.

You are not currently undertaking any courses of study.

When you departed Australia, you did not advise any Australian financial institutions including any Australian companies with whom you have investments that you were a foreign resident so that non-resident withholding tax can be deducted.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 6-1

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Summary

You are a resident of Australia for tax purposes.

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 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 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 a 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 a 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 period from Date one to Date two based on the following:

•         Physical presence - you were present in Australia for approximately X months of the 20XX income year and absent for the majority of the 20XX income year. You have returned to Australia on several occasions in the 20XX income year primarily for business reasons. For the few years prior to the ruling period, you were absent from Australia for XX days in the 20XX income year and XX days in the 20XX income year.

Although you were absent from Australia for a large part of the ruling period, you have retained your continuity of association with Australia and intend to return to Australia at the completion of your employment in Country A. In addition, your physical presence in the years prior to the ruling period indicate that you have retained your continuity of association with Australia and consider it your home.

•         Intention or purpose of presence - you have demonstrated your intention to treat Australia as your home by retaining Property B where your spouse and the majority of your personal effects are located. You have relocated to Country A for employment purposes but you maintain a permanent base in Australia and have all of your family ties here including your siblings and your parents.

•         Behaviour while in Australia -While in Australia, you reside at the home you share with your spouse. All of your family reside here and you will return to the same employer on your return to Australia. You have also retained your assets in Australia and kept your personal belongings at the house you share with your spouse. Your behaviour including the way you live your life indicates that you reside in Australia.

•         Family and business/employment ties - your parents, spouse and siblings all reside in Australia and you have no family in Country A. Once your employment contract is completed in Country A, you plan to come back to Australia and will continue to be employed by Company A. You have maintained your private health insurance cover and Medicare cover in Australia and did not advise the AEC of your departure or advise any financial institutions to withhold interest from your accounts on your departure from Australia.

Where you have been working overseas but return to Australia at intervals to an established family and social life, this will often mean that you continue to reside in Australia.

•         Maintenance and location of assets - you have a home in Australia that is occupied by your spouse, to which you will return once your employment in Country A has been completed. You also have several investment properties in Australia and several bank accounts. You have no assets in Country A except for a bank account.

•         Social and living arrangements - You reside in rental accommodation in Country A. In Australia, you reside at your home in Australia, for which you are currently paying a mortgage.

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 in 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 the 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 origin in Country A. You were not entitled to reside in Country A indefinitely and while living in Country A you hold a work permit which only allows you to stay in there for a limited number of years.

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 consideration 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:

•         The intended and actual length of the taxpayer's stay in the overseas country

•         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

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

•         Whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence

•         The duration and continuity of the taxpayer's presence in the overseas country

•         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

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

•         Intended and actual length of your stay in Country A - your intended length of stay in Country A is X years based on the length of your employment contract.

•         You intend to return to Australia at the completion of your contract in Country A

•         You reside in rented accommodation in Country A and have a home in Australia which your spouse occupies and is available for your use at all times. You also return to the property each time you travel back to Australia.

•         Durability of association - as outlined above, you have retained your family home and return to it consistently. You have all of your assets in Australia, with the exception of a bank account in Country A.

•         Your siblings and parents are also present in 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 were present in Australia for more than 183 days during the 20XX income year and the Commissioner is not satisfied that your permanent place of abode was outside Australia. You are a resident under this test for the 20XX income year.

You were not present in Australia for more than 183 days during the 20XX income year. Therefore, you are not a resident under this test for this income year.

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 years ending 30 June 20XX and 30 June 20XX.