Edited version of private advice

Authorisation Number: 1052264497776

Date of advice: 21 June 2024

Ruling

Subject: Residency

Question

Are you an Australian tax resident for the income years ended 30 June 2024, 2025, 2026 and 2027 as defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ended 30 June 20YY

Year ended 30 June 20YY

Year ended 30 June 20YY

The scheme commenced on:

XX XXXX 20YY

Relevant facts and circumstances

Your country of origin is Australia.

You are only a citizen of Australia.

You have an Australian drivers' license.

You do not own a car.

You have a de facto spouse.

You have been with your spouse for XX years.

Your spouse's country of origin is Australia.

Neither you nor your spouse have any dependants.

From XX XXXX 20YY to XX XXXX 20YY, you and your spouse travelled overseas on holidays.

Your spouse is employed by employer A.

Your spouse was posted in country A until 20YY.

You and your spouse do not have family in country A.

On XX XXXX 20YY, you left Australia with your spouse to live in country A for the duration of the posting.

Your spouse has visa A, which allows them to stay in country A.

The Australian government and embassy do recognise your status as spouse.

You have a limited stay visa B which allows you enter country A.

Your limited stay visa allows you to stay for XX months. You will renew this for the duration of your spouse's posting.

You and your spouse live at property A in country A.

Property A was selected from the approved rentals provided by your spouse's employer.

The lease for this apartment is in the name of your spouse's employer and paid for by them. The lease term is for XX months.

You are not sure if your will remain in the same accommodation for the duration of your spouse's posting in country A.

During the posting period, you were on approved unpaid leave from employer C.

You intend to return to this position when you return to Australia after your spouse's overseas posting.

On XX XXXX 20YY, you commenced a part time locally engaged staff position, XX days a week with employer B on an initial contract of XX months. The duties are performed within the Australian Embassy in country A.

For this position you will be paid in country A's currency and have the funds paid into a country A bank account.

You also obtained casual employment with employer D. This is the role required for you to get your sponsored visa B. You intend to continue to work in this role as it is a requirement of your visa.

You will not receive any income from sources outside of Australia besides your employment with employer B and D.

You cannot do either of your job types remotely.

You intend to seek employment within the employer C, in an Australian based role, to work remotely from country A.

You do not intend to apply for citizenship or permanent residency in country A.

Between XX XXXX 20YY to XX XXXX 20YY, you returned to Australia to see family and friends.

Your spouse owns property B in Australia.

Before leaving Australia, you lived in the property B with your spouse.

For the duration of posting your spouse will rent out the property B.

Agent A will manage renting property B while you both are in country A.

On the XX XXXX 20YY, the property B was rented to an unrelated party at market rate.

You and your spouse continued using the address of property B on official documents.

You use a redirection service to have your mail sent to you.

Your spouse continues to pay the mortgage of property B while in country A.

You put all your household effects into storage before moving to country A.

You took some of your personal effects with you to country A and left others in Australia.

You and your spouse own a pet who has been left in the care of your spouse's parents while you are both in country A.

You intend to resume responsibility for the pet when you return to Australia after your spouse's posting.

You did not inform the Australian Electoral Commission or Medicare that you were departing Australia.

You continue to pay your Australian private health insurance while in country A.

You plan to return to Australia in XXXX 20YY, XXXX 20YY, and XXXX 20YY to see and stay with family and friends.

For the duration of your spouse's posting, you plan to return to Australia twice a year.

When completing incoming and outgoing passenger cards, you declare as your address property B.

You are not at the time of this application a member of any professional, social or sporting connection in country A.

You were previously a member of PSSAP, but currently hold a superannuation account with company A.

You and your spouse are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990.

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

While you were living in Australia, you were not a member of any professional, social or sporting body.

You own the following assets in Australia:

•         Bank account A

•         Bank account B

•         Bank account C

•         Bank account D

•         Shares.

You have not advised any Australian financial institutions including any Australian companies with whom you have investments with that you are a foreign resident so that non-resident withholding tax can be deducted.

You own no other assets besides the country A bank account in country A.

In the 20YY income year, you will spend less than XX days in Australia.

In the 20YY income year, you will spend less than XX days in Australia.

In the 20YY income year, you will spend less than XX days in Australia.

In the 20YY income year, you will spend less than XX days in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1).

Income Tax Assessment Act 1997 section 995-1.

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 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... 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 will be a resident of Australia under the resides test for the period XX XXXX 20YY to XX XXXX 20YY based on the following:

•         Physical presence

o   On XX XXXX 20YY, you and your spouse moved to country A.

o   Between XX XXXX 20YY to XX XXXX 20YY, you returned to Australia to see family and friends. You also plan to return to Australia in XXXX 20YY, XXXX 20YY, and XXXX 20YY to see family and friends.

o   You plan to make multiple visits to Australia every year to see and stay with family and friends.

•         Intention or purpose

o   You have stated that you intend to work for the employer C when you return to Australia in 20YY. You have maintained this job and are on approved unpaid leave for the duration of your stay overseas.

o   You have stated that it is both you and your spouse's intention to return home after your spouse's posting ends in XXXX 20YY.

o   You have not advised any Australian financial institutions including any Australian companies with whom you have investments with that you are a foreign resident so that non-resident withholding tax can be deducted.

o   You and your spouse continued using your Australian address on official documents. You use a redirection service to have your mail sent to you.

o   You did not inform the Australian Electoral Commission or Medicare that you were departing Australia.

o   You continue to pay your Australian private health insurance while overseas.

o   You do not intend to apply for citizenship or permanent residency in country A.

•         Behaviour

o   You are living in an apartment that was selected from the approved rentals provided by your spouse's employer.

o   The lease for this apartment is in the name of your spouse's employer and paid for by them. The lease term is for XX months.

o   You are not sure if your will remain in the same accommodation for the duration of your spouse's posting in country A.

o   Your spouse is on visa A which allows them to stay in country A.

o   You are on visa B which allows you enter and stay in country A. This visa contingent on your employment with employer D. You must maintain this employment to remain on the visa type.

•         Family or employment ties

o   You and your spouse have no dependants.

o   Your family is in Australia.

o   You have no family in country A.

o   You have moved to country A to be with your spouse during their posting until 20YY.

o   You are on approved unpaid leave from employer C for the duration of your stay overseas.

o   You have been trying to obtain Australian employment to work from home in country A.

o   You have employment with employer B and D in country A. Employment with employer D is tied to your visa.

o   You have been working a part time role as a locally engaged employee role with employer B. You are only contracted for this role for XX months.

•         Maintenance and location of assets

o   Your spouse owned property B, which you lived while in Australia. This property is being rented out at market rate to an unrelated party for the duration of the posting overseas.

o   You own the following assets in Australia:

­   Bank account A

­   Bank account B

­   Bank account C

­   Bank account D

­   Shares

o   You have a country A bank account for the money paid from your employment in country A.

o   You have no other assets in country A.

•         Social connections

o   You are not a member of any professional, social or sporting connections in country A.

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 will not abandon your domicile of origin in Australia and acquire a domicile of choice in country A. You are not entitled to reside in country A indefinitely and while living in country A, you only hold a work permit which was valid for XX months. You are required to work in employment, which is tied to your 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 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:

•         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 dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside 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:

•         From XX XXXX 20YY until XX XXXX 20YY, you intend to stay in country A for the duration of your spouse's positing.

•         You intend to return to Australia after your spouse's posting and you have not definitely abandoned in a permanent way living in Australia.

•         You are on unpaid leave from your Australian employment and intend to return to that role when your spouse's posting has ended.

•         On the XX XXXX 20YY, you and your spouse's home in Australia at property B, was rented to an unrelated party at market rate.

•         The intention is to rent the property until you and your spouse return to Australia in 20YY.

•         When you visit Australia, the property is not available for you to use.

•         When you visit Australia, you stay with family and friends.

•         In country A, you and your spouse are living at property A. This property was selected by you both from the approved rentals provided by your spouse's employer.

•         The lease for property A is in the name of your spouse's employer and paid for by them. The lease term is for XX months. You are not sure if your will remain in the same accommodation for the duration of your spouse's posting to country A.

•         While property A is always available to you, it is not your established home, and your durability of association remains 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 will not be present in Australia for 183 days or more during the 20YY, 20YY, 20YY and 20YY income years. Therefore, you are not a resident under this test for those income years.

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 residency test and domicile test of residency and so are a resident of Australia for income tax purposes for the income years ended 30 June 20YY, 20YY, 20YY, 20YY.