Edited version of private advice

Authorisation Number: 1052276245655

Date of advice: 17 July 2024

Ruling

Subject: Residency

Question

Are you a tax resident of Australia pursuant to subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) after your departure from Australia on XX XXXX 20XX?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

XX XXXX 20XX

Relevant facts and circumstances

This ruling applies to person A and person B (jointly referred to as you).

You were born in country A.

You are dual country A and Australian citizens.

Between 19XX to 19XX, person A moved to Australia.

In 19XX, person B moved to Australia.

You are married and have one dependent child.

As of XX XXXX 20XX, you were residents for Australian income tax purposes as you ordinarily resided in Australia.

Your extended family live in Australia.

You jointly own property A in Australia.

On XX XXXX 20XX, property A was rented fully furnished to a family member at an arm's length, which there is a formal rental agreement.

You manage property A.

Property A was your principal place of residence before it was rented out.

You are treating property A as an investment.

Person A is employed by employer A in Australia.

On XX XXXX 20XX, person B ceased employment with employer B in Australia.

From XX XXXX 20XX to XX XXXX 20XX, person B took unpaid special leave from employer A to support person B in their overseas employment.

On XX XXXX 20XX, your family relocated to country B for person B's new employment.

You sold your motor vehicle before leaving Australia.

You took all your personal belongings with you to country B.

You advised the Australia Electoral role to remove your names.

You unenrolled from Medicare.

You advised your Australian financial institutions that you are a foreign resident so that non-resident withholding can be charged.

You cancelled your private health insurance.

You cancelled your mobile phone contract with their Australian telecommunications provider.

You have retained your Australian bank accounts which are being used for mortgage repayments and rental income for the property.

Person B will reside in country B on a work visa (the visa).

Person A and your child will be dependants on the visa.

Your family are residents of country V and hold residency cards.

On XX XXXX 20XX, person B commenced employment with employer C in country B.

Person B's role with employer C cannot be performed remotely.

The visas are tied to person B's employment with employer C.

Employer C was incorporated in country B.

Employer C is a tax resident of country B.

Employer C a tax non-resident of Australia.

Person B will receive remuneration from employer C for the services of their employment.

Person B's employment contract specifies their primary place of work is in country B.

Person B's contract duration with employer C is for XX years with the option to renew.

In country B, person A will not gain employment and will be a full-time parent taking care of your child.

Person B's income from employer C will be the only income you receive outside of Australia.

You will reside in a property B in country B.

You are independently renting property B.

Your family will be involved in social activities in country B.

Your child is enrolled in school in country B.

You will obtain a country B drivers' licence.

You will obtain mobile phone contracts with country B telecommunications provider.

Employer C provides private health cover for your family in country B.

You will receive all mail electronically.

From XX XXXX 20XX, you will only make trips to Australia to visit family during annual leave periods.

If you make a trip to Australia, you will not spend more than four weeks in an income year in Australia.

You state on your incoming passenger cards 'visitor', or 'temporary entrant' and country B as your country of residence.

From XX XXXX 20XX, you will not have a settled routine on visits to Australia.

You do not hold any other investment assets (such as shares or units).

You have cash in a superannuation member account.

You are not members of a superannuation scheme established by deed under the Superannuation Act 1990 (the Public Sector Superannuation Scheme).

You are not eligible employees for the purposes of the Superannuation Act 1976 (the Commonwealth Superannuation Scheme).

You will have bank accounts in country B.

Person B's salary and wages are paid into their country B bank account by employer C.

You will transfer the majority of your funds to your country B's bank account to cover your personal living expenses and those of your child.

You will lease or purchase a motor vehicle in country B.

In the 20XX income year, you have spent XX days in Australia.

From 30 June 20XX, you will not reside in Australia for 183 days or more in an income year.

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 are not a resident of Australia under the resides test for the period XX XXXX 20XX to XX XXXX 20XX based on the following:

•         Physical presence

o   From XX XXXX 20XX, you moved to country B.

o   From XX XXXX 20XX, you will only make trips to Australia to visit family during annual leave periods.

o   From XX XXXX 20XX, you will not have a settled routine on visits to Australia.

o   In the 20XX income year, you have spent XX days in Australia.

o   From XX XXXX 20XX, you will not reside in Australia for 183 days or more in an income year.

o   If you make a trip to Australia, you will not spend more than four weeks in an income year in Australia.

•         Intention or purpose

o   From XX XXXX 20XX to XX XXXX 20XX, person A took unpaid special leave from employer A in Australia to support person B in their overseas role. Person A has stated that it is their intention to resign from this employment after the leave ends and remain with person B in country B.

o   You have stated it is your intention to live in country B permanently.

o   You have stated you have no set plans to return to Australia.

o   You state on your incoming passenger cards 'visitor', or 'temporary entrant' and country B as your country of residence.

o   You sold your motor vehicle before leaving Australia.

o   You advised the Australia Electoral role to remove your names.

o   You unenrolled from Medicare.

o   You advised your Australian financial institutions that you are a foreign resident so that non-resident withholding can be charged.

o   You cancelled your private health insurance.

o   You cancelled your mobile phone contract with their Australian telecommunications provider.

o   You maintained your property in Australia as an investment property.

o   You became residents of country B and hold residency cards.

•         Behaviour

o   Your child was enrolled in school in country B.

o   You will obtain a country B drivers' licence.

o   You will obtain mobile phone contracts with country B telecommunications provider.

o   Employer C provides private health cover for your family in country B.

o   Your family will be involved in social activities in country B.

•         Family or employment ties

o   Your extended family live in Australia.

o   Person A is on leave from their employment in Australia and will not be employed in country B.

o   On XX XXXX 20XX, person B commenced employment with employer C.

o   Person B's employment is tied to your visa in country B.

o   Person B's contract duration with employer C is for XX years with the option to renew.

o   Person B's role with employer C cannot be performed remotely.

•         Maintenance and location of assets

o   You have property A in Australia.

o   You have retained your Australian bank accounts which are being used for mortgage repayments and rental income for property A.

o   You have cash in a superannuation member account.

o   You will have bank accounts in country B.

o   You will lease or purchase a motor vehicle in country B.

o   You took all your personal belongings with you to country B.

o   You do not hold any other investment assets (such as shares or units).

•         Social connections

o   Your family will be involved in social activities in country B.

o   Your child was enrolled in school in country B.

o   You will receive all mail electronically.

You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test).

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 XXXX'X situation

In your case, you were born in country A and your domicile of origin is country A. You immigrated to Australia between 19XX to 19XX and are a dual citizen of country A and Australia.

It is considered that you abandoned your domicile of origin in between 19XX to 19XX and acquired a domicile of choice in Australia. You are entitled to reside in Australia indefinitely and while living in Australia, you obtained permanent residency/citizenship.

Therefore, your domicile is Australia.

Application to XXXX'X situation

In your case, you were born in country A and your domicile of origin is country A. You immigrated to Australia in 19XX and are a dual citizen of country A and Australia.

It is considered that you abandoned your domicile of origin in 19XX and acquired a domicile of choice in Australia. You are entitled to reside in Australia indefinitely and while living in Australia, you obtained permanent residency/citizenship.

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 both XXXX and XXXX'S situation

The Commissioner is satisfied that your permanent place of abode is outside Australia because:

•         You have severed the following ties with Australia:

o   You sold your motor vehicle before leaving Australia.

o   You advised the Australia Electoral role to remove your names.

o   You unenrolled from Medicare.

o   You advised your Australian financial institutions that you are a foreign resident so that non-resident withholding can be charged.

o   You cancelled your private health insurance.

o   You cancelled your mobile phone contract with their Australian telecommunications provider.

•         You hold a property A in Australia. This property is not available to you when you visit.

•         On XX XXXX 20XX, person B commenced employment with employer C in country B. The contract duration with employer C is for XX years with the option to renew. You must perform your work duties in country B.

•         You are independently renting property B in country B.

•         You no longer have a settled routine in Australia.

•         You have stated you do not have the intention to return to Australia.

Therefore, you are not 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 the 20XX income year

You have been in Australia for 183 days or more in 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 the 2024 income year

The Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income 20XX income year based in the following:

•         You hold a property B in Australia. This property is not available to you when you visit.

•         On XX XXXX 20XX, person B commenced employment with employer C in country B. The contract duration with employer C is for XX years with the option to renew. You must perform your work duties in country B.

•         You are independently renting property B in country B.

•         You no longer have a settled routine in Australia.

•         You have stated you do not have the intention to return to Australia.

•         You will only make trips to Australia to visit family during annual leave periods.

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 the 20XX income year

The Commissioner is satisfied that you did not intend to take up residence in Australia for the relevant income year because:

•         You have severed the following ties with Australia:

o   You sold your motor vehicle before leaving Australia.

o   You advised the Australia Electoral role to remove your names.

o   You unenrolled from Medicare.

o   You advised your Australian financial institutions that you are a foreign resident so that non-resident withholding can be charged.

o   You cancelled your private health insurance.

o   You cancelled your mobile phone contract with their Australian telecommunications provider.

•         Person B gained employment in country B which could not be performed remotely.

•         From XX XXXX 20XX to XX XXXX 20XX, Person A took unpaid special leave from employer A to support person B in their overseas role.

•         Your family became residents of country B and hold residency cards.

Application to the income years ended 30 June 20XX, 20XX, 20XX and 20XX

You will not be present in Australia for 183 days or more during the income years ended 30 June 20XX, 20XX, 20XX and 20XX. Therefore, you are not a resident under this test for the beforementioned 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

As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the years ended 30 June 20XX, 20XX, 20XX, 20XX and 20XX.