Edited version of private advice

Authorisation number: 1052298704880

Date of advice: 29 August 2024

Ruling

Subject: Residency

Question

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

Answer

No.

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 are a citizen of Country X.

You arrived in Australia on XX/XX/20XX.

Prior to arriving in Australia, you lived and worked in Country Y from XX/20XX until XX/XX/20XX. You held a pass during this time which allowed you to do so.

You and your spouse met in Country Y in 20XX.

Your spouse is a citizen of Country Z.

Your spouse accompanied you to Australia.

In XX/20XX, you travelled to Country X to see your family.

In 20XX, you travelled to Country A to work and see family and to Australia, Country B, and Country C for leisure purposes.

In 20XX, you travelled to Country Z to see your spouse's family, and Country X to see your family to attend celebrations and for leisure purposes. You also travelled to Country D and Country E for leisure purposes.

In 20XX, you travelled to Country Z for a celebration, to see your spouse's family and for leisure purposes. You also travelled to Country C for leisure purposes.

In XX,20XX, you travelled to Country F for a celebration and for leisure purposes. You also travelled to Country X for a celebration and to see family and for leisure purposes.

You transferred the funds you saved in Country Y to an Australian account.

You have not met the Country X statutory residency tests since 20XX.

Most of your close family live and work in Country X.

You currently hold a temporary visa.

Your spouse also holds a temporary visa.

Your visa is due to expire on XX/XX/20XX.

Your spouse works in a certain industry and intends to continue working in this field in Australia.

Your spouse has applied several times for permanent residency, however, was unsuccessful.

You intend to remain in Australia permanently and intend on being named as a dependent on your spouse's permanent residency application if they are successful in obtaining permanent residency.

You do not intend on applying for permanent residency due to not meeting the skill assessment criteria.

You have purchased a vehicle in Australia.

You have opened bank accounts in Australia.

You do not have employment in Australia.

You do not own any property in Australia.

You do not have a long-term rental contract in Australia.

You are currently living in temporary accommodation.

You are travelling around Australia.

You are currently seeking employment in the agricultural industry.

Your spouse is currently undertaking seasonal work.

You do not have any foreign employment, foreign investments, or foreign property.

In XX/20XX, you intend to travel to Country Y for a wedding.

In the future, you intend to spend most of your time in Australia. You also intend to travel around Australia, travel to Country X to see your family, travel to Country Z to see your spouse's family and engage in leisure travel outside of Australia.

You are not a foreign resident for tax purposes.

You have not lodged any foreign tax returns whilst living in Australia.

You applied to undertake study at an educational institution in Australia. You decided against undertaking the study, however, have remained in touch with the group.

You have not maintained any professional, social, or sporting connections in Country X or Country Y.

You hold an Australian driver's licence and a Country Y drivers' licence. You will not renew your Country Y drivers' licence when it expires.

You have bank accounts in Country Y and Country X, and you receive small amounts of interest from your bank account in Country Y.

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

You are not a resident of Australia under the resides test, from 1 April 20YY for the 20YY income year based on the following:

•         You are currently travelling around Australia.

•         You do not have a fixed address in Australia.

•         You have not entered into a long-term lease arrangement or purchased property in Australia.

•         You are currently living in temporary accommodation.

•         You are currently in Australia on a temporary visa.

•         You do not have employment in Australia.

•         You have not applied for permanent residency, nor have you obtained permanent residency.

•         Your spouse has not obtained permanent residency.

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 X and your domicile of origin is Country X.

There is insufficient evidence to determine that you acquired a domicile of choice in Country Y. You were not entitled to reside in Country Y indefinitely and whilst living in Country Y, you only held an employment visa which has since expired.

It is also considered that you did not acquire a domicile of choice in Australia. You were not entitled to reside in Australia indefinitely and while living in Australia, you only hold a temporary work visa which is only valid until XX/XX/20XX.

Therefore, your domicile is Country X, and 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 income year. 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 year ended 30 June 20XX.