Edited version of private advice

Authorisation Number: 1052267533657

Date of advice: 28 June 2024

Ruling

Subject: Residency

Question

Are you an Australian resident for tax purposes for the 20XX, 20XX, and 20XX income years?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

30 June 20XX

Relevant facts and circumstances

You were born in Australia and are a citizen of Australia.

Your family lives in Australia.

Your spouse was born in Australia and is a dual citizen of Australia and Country Y.

You are employed in Australia and work a couple of days per week on average.

In XX 20XX, you travelled to Country Y and in XX and XX 20XX, you travelled to Country A, Country B and Country C. Both trips were with your family to celebrate your children's school graduations.

You and your spouse are members of an organisation.

In XX 20XX, you and your spouse were both offered roles overseas through the organisation for several years. The role involves assisting the organisation with safety, housing, transport, emotional, mental, and spiritual support of younger members. There is no contract, agreement or salary associated with this role. You did not volunteer for this role, and instead you were selected by the organisation to undertake the role.

In XX 20XX, you were advised that the role would be in Country Y.

You intended to travel to Country Y on XX XX 20XX.

The organisation will provide a home to house you, your spouse, and your child. You will be replacing another couple that lived in the home for several years and another couple will replace you following your stay.

You do not intend to travel whilst you are in Country Y and the organisation has requested that you avoid any unnecessary travel during your stay. You will rarely leave your assigned area, with the exceptions being for weddings and funerals and future birth of grandchildren and other celebrations.

The organisation provides housing, furniture, transport vehicles, computers, mobile phones, household support services, medical and health insurance, and education for children.

A small monthly deposit into an Australian bank account will be used to provide for meals and entertainment whilst you are in Country Y.

You have X children.

Your adult children will maintain your property in Australia and cover the utility bills.

You will enter Country Y on a visa.

Your child will accompany you to Country Y on a visa and attend local schools.

You own several rental properties in Australia held by Trusts.

You have a small company that receives commissions only.

You have a self-managed superannuation fund in Australia. This fund owns a commercial property that is leased and a share portfolio that is managed by your financial planners.

You intend to suspend your private health insurance as you will be covered by the organisation whilst you are away.

You do not intend to notify Medicare that you are departing Australia.

You do not intend to notify the Australian Electoral Commission (AEC) that you are leaving Australia.

You do not intend to earn any income whilst in Country Y.

You have shipped some personal items, food and beverages to Country Y for you to use whilst you are there, as well as some paintings and photos to remind you of home and some DVD's to share with the people you will be serving in Country Y.

You have not shipped any of your furniture or belongings to Country Y as these items will remain in your home as you intend to return in several years.

You do not have any connections in Country Y aside from the organisation.

You have an Australian driver's licence.

You have several bank accounts in Australia.

You do not intend to establish any bank accounts in Country Y.

You own a motor vehicle in Australia which your adult children will use until your return to Australia.

You receive your mail in Australia.

You intend to return to Australia and your family when your role concludes.

You intend to focus on property development when you return to Australia.

You enjoy travelling and intend to have holiday prior to returning to Australia and also intend to travel in the future for short holidays.

When completing incoming and outgoing passenger cards, you state that you are an Australian resident and provide your Australian address.

As you intend to maintain your tax residency, you have not advised any Australian financial institutions or Australian companies, with whom you have investments of a change of tax residency.

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 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 and your spouse were selected to undertake a role within the organisation in the Country Y.

•         You intend to return to Australia when your role concludes.

•         Your family lives in Australia.

•         You own a property in Australia which is your main residence.

•         You own several rental properties in Australia.

•         You have several bank accounts in Australia.

•         You do not own property in Country Y or have any tenancy agreements in place.

•         You do not have any connections in the Country Y aside from the organisation.

•         You will not be earning any income whilst you are in Country Y.

•         Most of your personal belongings will remain in Australia.

•         You have previously been involved with the organisation in Australia.

•         You own a motor vehicle in Australia.

•         You receive your mail in Australia.

You are a resident of Australia under the resides test for the 20XX, 20XX, and 20XX income years.

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

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 Australia and your domicile of origin is Australia.

Based on the information provided, it is not viewed that you will abandon your domicile in Australia. You are not entitled to reside in Country Y indefinitely and whilst you are living in Country Y, you only hold a visa for the duration of you stay.

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; and

•         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 and your spouse were selected to undertake a role within the organisation in the Country Y.

•         You intend to return to Australia when your role concludes.

•         Your family lives in Australia.

•         You own a property in Australia which is your main residence.

•         You own several rental properties in Australia.

•         You have several bank accounts in Australia.

•         You do not own property in Country Y or have any tenancy agreements in place.

•         You do not have any connections in the Country Y aside from the organisation.

•         You will not be earning any income whilst you are in Country Y.

•         Most of your personal belongings will remain in Australia.

•         You have previously been involved with the organisation in Australia.

•         You own a motor vehicle in Australia.

•         You receive your mail 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 will not be present in Australia for 183 days or more during the 20XX, 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 will satisfy the resides and domicile tests of residency and so will be a resident of Australia for income tax purposes for the years ended 30 June 20XX, 20XX, and 20XX.