Edited version of private advice

Authorisation Number: 1052275863397

Date of advice: 15 July 2024

Ruling

Subject: Residency

Question

Are you an Australian resident for tax purposes for the 20XX income year?

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

You were born in Country X and are a citizen of Country X.

You moved to Australia in 19XX for and became an Australian citizen.

You have spent your entire working life in Australia.

You were a contributing member of the Commonwealth Superannuation Scheme until your retirement in 20XX.

You returned to Country X permanently in XX/20XX until XX/20XX. You did not leave Country X during this time.

When you moved to Country X, you informed the Australian Electoral Commission that you had left Australia indefinitely.

You arrived in Australia in XX/20XX with your spouse.

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

You are currently staying with your spouse and your child in Australia in a property that is owned by your spouse.

You are a resident of Country X for taxation purposes.

You have not lodged any foreign income tax returns whilst you have been in Australia.

You intend to return to Country X on XX/XX/20XX. Following your departure, you do not intend to return to Australia, however you may return for a short visit or consider moving to Australia permanently in the future.

When you return to Country X, you intend to travel within Country X for holidays and to see friends. You also intend to visit Continent A during the year.

Since you arrived in Australia, all your travel movements have been within Australia.

You have friends and relatives in both Country X and Australia.

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

You own a property with your spouse in Country X. This property is currently being rented on a X month lease which will conclude around the time that you intend to return to Country X.

You are receiving rental income in Country X whilst your property is being rented. You do not receive any other income from Country X.

You have a bank account in Australia.

You receive income in Australia from a pension.

You are not making voluntary contributions to this pension.

You have a joint bank account with your spouse in Country X.

You receive some of your mail in Australia.

Your mail in Country X has been redirected to your child's address in London.

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... 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

We have taken the following into consideration when determining whether you meet the resides test:

•         You own a property in Country X jointly with your spouse, which is not available to you as it has been rented.

•         Your spouse accompanied you to Australia.

•         You spouse owns a property in Australia.

•         You are staying with your spouse in their property in Australia.

•         You have friends and relatives in Australia.

•         You have a bank account in Australia.

•         You have a driver's licence in Australia.

•         You receive your mail in Australia.

•         You receive income in Australia from a pension.

You are a resident of Australia under the resides test for the 20XX income year.

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 Country X and your domicile of origin is Country X.

You moved to Australia in 19XX And became an Australian citizen. It is considered that you abandoned your domicile of origin in Country X and acquired a domicile of choice in Australia. When you returned to Country X in 20XX, you returned to your domicile of origin. There is insufficient evidence to determine if you have acquired a domicile of choice again in Australia.

Therefore, your domicile is Country X.

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 been present in Australia for 183 days or more during the 20XX income year. Therefore, you will be a resident under this test unless the Commissioner is satisfied that your usual place of abode was outside Australia, and you do not have an intention to take up residence in Australia.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live, and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836.

Application to your situation

The Commissioner is not satisfied that your usual place of abode was outside Australia for the relevant income year based in the following:

•         You own a property in Country X jointly with your spouse, which is not available to you as it has been rented.

•         You spouse owns a property in Australia.

•         You are staying with your spouse in their property in Australia.

•         You have friends and relatives in Australia.

•         You have a bank account in Australia.

•         You receive income in Australia from a pension.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Application to your situation

The Commissioner is satisfied that you did intend to take up residence in Australia for the relevant income year because:

•         Your spouse accompanied you to Australia.

•         You are staying with your spouse in their property in Australia.

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 183-day tests of residency and so will be a resident of Australia for income tax purposes for the year ended 30 June 20XX.