Edited version of private advice

Authorisation Number: 1052296331001

Date of advice: 30 August 2024

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes from the ruling period?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You were born in Country A.

You are XX years old.

You obtained Australian citizenship in XX 19XX.

Your spouse was born in Country B and obtained Australian citizenship in XX 19XX.

You are not a member of a Commonwealth Superannuation fund.

Relocation to Country C

You relocated to Country C prior to the ruling period.

You have been living in Country C for the last XX years.

You are planning to retire in the next few years, you anticipate you will likely spend at least another X years in Country C in addition to your existing X years which would coincide with your retirement.

You took the following steps when relocating:

•         Cancelled your private health insurance

•         Cancelled your Australian phone

•         Disposed of/relocated belongings (You have not owned a car in Australia since 20XX)

•         You personally leased and furnished accommodation in Country C

•         You closed unnecessary Australian bank accounts.

When visiting Australia, you mark your immigration cards as 'Visitor or temporary entrant' with your residence being Country C.

Accommodation/Living Arrangements

Initially you relocated ahead of your spouse, who then joined you in prior to the ruling period.

You initially rented a studio apartment in Country C, later moving into a larger apartment within Country C to accommodate your spouse when they joined you in prior to the ruling period.

You have lived continuously in Country C since your arrival, however, you moved between apartments several times due to changing circumstances personally and also the rental market was difficult to secure long term accommodation due to an event held in Country C in 20XX. Most of your time was spent in apartments.

In anticipation of your spouse re-joining yourself, you recently upgraded to a 1 bedroom, 2-bathroom apartment.

All properties leased were unfurnished and you fully furnished the accommodations at your own expense.

Your current lease is for a 13 month period from the XX XX 20XX to XX XX 20XX.

Assets

You and your spouse jointly own a property in Australia located at XX XX XX (the XX property) that was purchased in 20XX and treated as your main residence.

Your employment is generally worked in fly-in/flyout roles often interstate.

You have never worked in XX.

You have only stayed in the XX property for one month in XX 20XX.

The XX property was mainly occupied by your spouse.

Since acquiring the XX property, you have lived and worked in XX for X years as well as XX.

You have not rented the XX property throughout your ownership.

You intended to sell this property some time ago however it required work completed prior to the sale.

With COVID-19 pandemic you and your wife were unable to have the necessary works completed to sell. Therefore, the property remained vacant, or inhabited by members of your family for a time prior to being occupied by your spouse.

You are now concluding the necessary repairs/renovations to enable the sale of the property.

Whilst owning the above property, you repatriated funds necessary to for the property expenses. After the sale of the property, you do not plan to repatriate any funds to Australia.

After the sale, the furniture in the property will be sold or relocated to you.

Your other Australian assets are limited to your Australian superannuation fund.

You have a foreign savings account.

You currently hold bank accounts with XX bank in Country C and Australia.

You do not have a connection with any other Australian financial institutions.

You own several guitars and recording equipment in your home in Country C.

Lifestyle/Social and Employment Ties

You are married and have XX adult children who were all born in and living independently in Australia, the youngest of which is XX years old.

Your mother is deceased, and your father is aged in his XX's and lives in Australia.

You rarely visit your father, visiting twice in the last XX years.

You do not have close friends in Australia.

You have held a Country C driving licence since XX 20XX.

You own and maintain two cars in Country C. One was purchased in XX 20XX and the second in XX 20XX.

Your lifestyle in Country C is very similar to your former lifestyle in Australia.

You have a gym membership in Country C.

You play the guitar and are a member of a social music group in Country C.

You are still on the electoral roll in Australia, however you have only voted on the voice referendum in recent elections.

You hold a Country C residence permit which is valid for the duration of your current employment project which is 2030.

You are unsure where you and your spouse will retire. You will evaluate with your spouse closer to the time, but the expectation is that more than likely you will not resettle in Australia.

Your spouse's time in Australia

When the COVID-19 pandemic was prevalent in 2020 your spouse was living with you in Country C and running a business. The pandemic forced the closure of this business and significantly changed your lifestyle in Country C. Although your spouse wanted to stay in Country C, it was agreed she should temporarily return to Australia for the duration of the pandemic and left in XX 20XX, whilst you remained in Country C.

Your spouse plans to re-join you in Country C after the sale of the Australian property.

Change in employment

You ceased employment with your former employer on XX XX 20XX after you accepted a new role which you started on XX XX 20XX which was a rotational role with 12-weeks on with 2 weeks off.

This allows you greater chance to travel than your previously employment.

During your rotational weeks off, you may visit Australia or other locations.

Your current employer is a foreign employer. Your current employer has guaranteed employment until 20XX on the current project.

You are paid in XX XX based on a day rate denominated in XX.

Illness

You were diagnosed with XXXX in Country C in XX 20XX.

You have had XXXX removed and two years of ongoing treatment in Country C.

Once your treatment was finished, you established a relationship with an oncologist in Australia to facilitate ongoing monitoring of the XXXX and for the best quality of care.

In XX 20XX, you were diagnosed with XXXXX by your Australian oncologist.

Due to the quality and availability of treatment available in Australia vs overseas, you have chosen to receive your treatment in Australia.

Due to your cancer treatment, you have been returning to Australia during your rotational off weeks for follow-up surveillance and treatment.

Currently, your XXXX is being surveyed every XX months and you intends to visit your adult children when you visit Australia. You estimate you will spend around two weeks per visit going forward.

During this time, you do not intend to take up residence in Australia or make Australia your home.

You have not claimed the Medicare rebate for any of your recent medical treatments or medications in Australia.

In the ruling period, you have spent XX days and XX days in Australia respectively spread over X visits. X of these visits were primarily for the purpose of receiving XXXX treatment.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 6(1)

Reasons for decision

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 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 ruling periods based on the following:

Physical presence - Since XX 20XX your physically present in Australia between the ruling periods have been XX days and XX days in Australia respectively spread over X visits of which X visits were primarily for the purpose of receiving medical treatment.

Intention or purpose - your stated purpose to live in Country C is evidenced by you obtaining foreign employment with guaranteed employment until 20XX on your current project.

Behaviour - you have stated you will return to Australia for the primary purpose of medical treatment and to visit your adult children. You have stated you do not intend to take up residence or make Australia your home.

Family and business/employment ties - Your spouse is currently living in Australia in a home you jointly own, the fact you are preparing the home for sale and your wife will join you overseas shows your intention to permanently abandon Australia. Your employment ties are overseas, and you are contracted with an oversea employer until 20XX.

Maintenance and location of assets - apart from the home that you are preparing for sale, your only other asset in Australia is your Superannuation. You own two cars in Country C.

Social and living arrangements -You have a gym membership in Country C. You have become a member of a local music group in Country C and you are currently living in Country C on a long term lease.

You are not a resident of Australia under the ordinary concepts test from the date of your departure. your intention was to leave Australia indefinitely and your observable behaviours are consistent with this. Your remaining connection with Australia (your superannuation and assets) are not, in your circumstances, consistent with continuing to reside in Australia. This is because on your ongoing employment in Country C and no fixed intention of returning to Australia to live.

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 your situation

In your case, you were born in Country A and your domicile of origin is Country A. You immigrated to Australia and became an Australian citizen In prior to the ruling period.

It is considered that you abandoned your domicile of origin in Country A and acquired a domicile of choice in Australia.

You were not entitled to reside in Country C indefinitely and while living in Country C, you only held a work permit which was valid until 20XX.

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

•         You have been living in Country C for the last X years

•         You have employment in Country C until 20XX and plan to stay in Country C

•         You have established a home in Country C with long term leases

•         You are in the process of preparing your Australian property for sale.

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 your situation

You have not been present in Australia for 183 days or more during the 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

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 ruling periods.