Edited version of private advice

Authorisation Number: 1052300536805

Date of advice: 10 September 2024

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for tax purposes from XX XXXX 20XX to XX XXXX 20XX?

Answer 1

No

Question 2

Are you a temporary resident of Australia pursuant to section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) from XX XXXX 20XX to XX XXXX 20XX?

Answer 2

Yes

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

You were born in Country A.

You moved to Country B as a child.

As an adult, you became a citizen of Country B. This is the only country of which you are a citizen.

Your family resides in Country B.

You have no spouse or dependants.

You previously visited Australia for a couple weeks for tourism.

In Country B, you co-owned a property with your ex-spouse. This property was your main residence prior to moving to Australia.

Prior to moving to Australia, your personal effects were placed in storage, and you sold your car.

On XX XXXX 20XX, you entered Australia alone on visa.

On XX XXXX 20XX, you started renting out your Country B property as fully furnished at market rate. The property is managed by agents.

When travelling to Australia, you stated Country B as your country of residence.

You maintained your gym membership from Country B as it allowed access to the same gym facilities in Australia.

For a couple of weeks, you stayed with a friend.

Prior to coming to Australia, you were employed as a resource teacher in Country B. Within January and February, you received income this employment, as you were on annual leave at the time.

From XX XXXX 20XX, you were granted leave from your employer in Country B for XX-months without pay. On XX XXXX 20XX, you subsequently resigned from this role.

For the remainder of the period in Australia, you rented a room in a share house. You did not sign a tenancy agreement to stay at this accommodation.

For a couple of weeks, you made a trip to Country C for tourism and to visit friends. After the trip you returned to Australia.

You are registered with the Teacher Registration Board in Australia.

You were employed casually by Employer A for a short period as a teacher/program coordinator.

For several months, you were employed full-time by Employer B as a school teacher.

During this time you were paid some arrears from work completed in Country B during 20XX.

You were employed casually by Employer A for another brief period.

For a couple of months, you were employed casually by Employer C as a relief teacher.

For a couple of days, you had a holiday in Country D.

While in Australia, you volunteered to assist in coaching a local soccer team.

You currently have not applied for citizenship or permanent residency in Australia.

You have an Australian bank account. This is the only Australian asset you own.

You did not get private health insurance or enrol in Medicare while in Australia.

You have an Australian driver's license.

On XX XXXX 20XX, you left Australia to head to Country C via Country B.

On XX XXXX 20XX, you arrived in the Country C on a visa to live and work for a period up to 2 years. This visa has the possibility to be extended further. This visa is not tied to specific employment.

You intend to continue teaching in Country C and stay in the same location.

You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 or an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Question 1

Are you a resident of Australia for tax purposes?

Summary

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 or 20XX.

Detailed reasoning

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 based on the following:

•                     period of physical presence in Australia:

-        you were in Australia for the following periods

o        Period 1.

o        Period 2.

o        Period 3.

•                     intention or purpose of presence

-        You have stated your intention when arriving in Australia was to work here for XX years.

-        You have stated you intend on returning to Australia after a substantial time abroad.

•                     behaviour while in Australia

-        You registered with the Teacher Registration Board in Australia.

-        You had multiple different teaching roles both full-time and casual in Australia.

-        You resigned from your Country B employment.

-        You rented out your Country B property.

-        You did not sign a formal tenancy agreement; however, you rented out a room in a share house.

•                     family and business/employment ties

-        Your family and friends reside in Country B.

-        You are registered with the Teacher Registration Board in Australia until XX XXXX 20XX.

-        You currently hold no employment in Australia or Country B.

•                     maintenance and location of assets

-        You co-own a property in Country B, which is rented fully furnished at market rate.

-        You left your personal effects in storage in Country B.

-        You own bank accounts in Australia, Country B and Country C.

•                     social and living arrangements.

-        You lived in temporary accommodation in a share house.

-        You coached a local soccer team in Australia.

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 Country B with your family as a child in 19XX and became a Country B citizen in 20XX. Country B became your domicile of dependence (as a child) and remained your domicile of choice (as an adult). You moved to Australia on XX XXXX 20XX and departed on XX XXXX 20XX. You have not applied to become an Australian permanent resident or citizen during this time.

We do not consider that you acquired a domicile of choice in Australia. You are entitled to reside in Australia indefinitely under your visa, which is connected with your citizenship in Country B. However, your observable conduct is not consistent with an intention to make your home in Australia indefinite at this time.

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 or 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 years ended 30 June 20XX or 20XX.

Question 2

Are you a temporary resident of Australia pursuant to section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Detailed reasoning

Section 995-1 of the ITAA 1997 states that you are a temporary resident if:

•                     you hold a temporary visa granted under the Migration Act 1958

•                     you are not an Australian resident within the meaning of the Social Security Act 1991, and

•                     your spouse is not an Australian resident within the meaning of the Social Security Act 1991.

Under the Social Security Act 1991, an Australian resident is generally a person who resides in Australia and is either an Australian citizen or the holder of a permanent resident visa.

In your cases, for the duration of your time in Australia, you were not an Australian resident within the meaning of the Social Security Act 1991 as you were not an Australian citizen, the holder of a permanent visa or a protected special category visa holder. While you do hold a SCV, you were not present in Australia on or before 26 February 2001 and are not a protected SCV holder as defined in the Social Security Act 1991. You do not have a spouse.

You hold a temporary visa. As such, you are a temporary resident of Australia for the ruling period.