Edited version of private advice

Authorisation Number: 1052303495754

Date of advice: 12 September 2024

Ruling

Subject: Residency

Question

Are you an Australian resident for tax residency purposes?

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

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

Your country of origin is Australia.

You also hold dual citizenship in Country A, which is the birthplace of your parents.

You have a spouse and XX dependent children.

Your children were born in Country B.

Your parents and siblings reside in Australia.

You do not own any property in Australia except for a bank account.

You have an Australia driver's license.

When you left Australia, you informed the Australian Electoral Commission that you were departing.

You did not have any private health insurance in Australia.

During 20XX, you worked in Country C.

From 20XX to 20XX, you resided in Country D on a visa connected to your spouse. Your spouse's employer provided your accommodation.

From XX XXXX 20XX, you started to receive rental income from a property you own in Country A. The income you receive from this property is the only income you receive. It is deposited into a Country A bank account.

You are not a resident of Country A for tax purposes.

On XX XXXX 20XX, you relocated to Country E. Your spouse performed the same role as they did in Country D. This is where you currently reside on a visa connected to your spouse.

You are not considered a resident of Country E for tax purposes by Country E's tax authorities due to your spouse's special status in relation to their work.

On XX XXXX 20XX, you and your spouse entered a rental agreement in Country E. Your spouse's employer provided your accommodation. You intend to renew this lease until your spouse's role ceases.

On XX XXXX 20XX, the visa connected to your spouse in Country E will expire. You intend to get this visa renewed until your spouse's contract ends. At this point, your spouse will look at getting another similar role in a different country. Your spouse does not intend to retire, and you do not intend to remain in Country E after the employment ends.

You joined an informal recreational sporting club in Country E.

When you are moving to a new location, you bring your household and personal effects with you by shipment.

Your spouse owns a property in Country B.

You were in Australia for less than 183 days for each of the income years ended 30 June 20XX, 20XX, 20XX, 20XX and 20XX. You currently do not believe you will be in Australia for more than 183 days in future years.

When you enter Australia, you state you are a visitor or temporary entrant, with your country of residence being Country E.

You stay with your parents and your dependants occasionally accompany you.

You list your parents' address in Australia if you are receiving mail. You do this because the mailing service in Country E is unreliable.

Neither you nor your spouse are 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.

Assumptions

For the purpose of this ruling, it is assumed that the facts of your situation as outlined above will not materially change during the ruling period and will continue until 30 June 20XX. It is also assumed that you will remain in Country E and not be in Australia for 183 days or more during the income years ending 30 June 20XX, 20XX and 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

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 principal 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 periodbased on the following:

•         Physical presence

­   For a period, you worked in Country C.

­   For a period, you lived in Country D with your spouse and children.

­   From XX XXXX 20XX until now, you have been living in Country E with your family.

­   After XX XXXX 20XX, your spouse intends to perform a similar employment role in a different country. You will accompany them.

­   You were in Australia for less than 183 days for the income years ended 20XX, 20XX, 20XX, 20XX and 20XX.

•         Intention or purpose

­   You do not own any property in Australia apart from a bank account.

­   You do not believe you will be in Australia for more than 183 days in future years.

­   You intend to get your visa in Country E renewed until your spouse's contract ends. At this point, your spouse will look at getting another similar role in a different country. Your spouse does not intend to retire, and you do not intend to remain in Country E.

•         Behaviour

­   Since XX XXXX 20XX, you have been overseas living with your family and will continue to do so indefinitely.

­   You have been renting in Country E and intend to renew your lease.

­   Your children were born in Country B.

­   You only come to Australia to visit your parents. You stay with your parents when visiting.

­   When entering Australia, you state you are a visitor or temporary entrant.

•         Family or employment ties

­   Your spouse and dependants live with you in Country E.

­   You have parents and siblings in Australia. You stay with them when you visit Australia.

­   You do not have employment.

•         Maintenance and location of assets

­   You own a property in Country A, from which you derive rental income. This is the only income you receive.

­   You own a bank account in the following countries:

o   Australia.

o   Country A.

o   Country E.

­   You do not own any other assets or properties in Australia.

­   When you are moving to a new location, you bring your household and personal effects with you by shipment.

•         Social connections

­   You were a member of XX clubs, and a University Alumni in Australia.

­   You joined an informal recreational sporting club in Country E.

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 Australia and your domicile of origin is in Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country E or another country. You are entitled to reside in Country E for as long as your spouse holds their special visa. You are not a tax resident or citizen of either Country E or Country A.

Therefore, your domicile is in 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:

•         The only property you own is in Country A.

•         When you visit Australia, you stay with your parents.

•         You have entered into long term rental agreements in Country E. You intend to renew the lease until your spouse's contract expires and then move to a different country.

•         You have abandoned, in a permanent way, living in Australia.

•         Since 20XX, the duration and continuity of your presence in overseas countries is greater than in 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 your situation

You have not been present in Australia for 183 days or more during the income years ended 30 June 20XX, 20XX, 20XX, 20XX and 20XX. You have also stated that you will not be present in Australia for 183 days or more during the income years ending 30 June 20XX, 20XX and 20XX. Therefore, you are not a resident under this test for those 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 20XX-XX to 20XX-XX income years.