Edited version of private advice

Authorisation Number: 1052319964819

Date of advice: 18 October 2024

Ruling

Subject: Residency

Question 1

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

Answer 1

Yes.

Question 2

Are you able to claim the main residence exemption for the sale of the property under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 2

Yes.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Country X.

In 20XX, you moved to Australia.

You were provided with a scholarship to study at an educational institution.

In XX/20XX, you became an Australian citizen.

In 20XX, you graduated from the educational institution.

Since you graduated, you have been employed in your area of study.

Your spouse is an Australian citizen.

You and your spouse have X children.

Your spouse's parent resides in Country Y and suffers from a medical condition.

On XX/XX/20XX, you and your family accompanied your spouse to Country Y to care for their parent.

You hold a spouse visa in Country Y that is valid for a period.

You do not intend to reside in Country Y permanently and intend to return as soon as your spouse's parent has recovered.

You are temporarily staying with your spouse's parent in Country Y.

Your children will attend school whilst you are in Country Y.

You intend to rent a property in Country Y on a short term basis to be closer to your children's school.

Your employer has advised that you have a position available when you return to Australia.

You have been offered work in Country Y which you intend to accept to support your family.

You maintain a membership in your specialist field.

You intend to further your career when you return to Australia.

Your spouse is employed by an Australian company. Your spouse's employer has agreed that they can work remotely whilst they are caring for their parent.

You owned a property that was the main residence for you and your family. The property was not leased or used to produce income.

You intended to lease the property during your stay in Country Y, and advertised for a tenant, however only one potential tenant was located. You determined that there was financial risk involved with the tenant and decided to sell the property.

The property was listed for sale on XX/XX/20XX.

The property was sold on XX/XX/20XX with settlement occurring on XX/XX/20XX.

You intend to use the proceeds from the sale of the property to purchase a new property when you return to Australia.

You have bank accounts in Australia.

You have an Australian driver's licence.

Your name remains on the Australian Electoral Roll.

You have Medicare.

You have private health insurance in Australia.

You and your spouse have close friends in Australia.

You are maintaining connections with your children's school parents and leisure groups whilst you are in Country Y.

You and your spouse have lodged tax returns as Australian residents.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(1)

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-110

Reasons for decision

Question 1

For tax purposes, you are a resident of Australia if you meet at least one of the following tests. You are not a resident of Australia if you do not meet any of the tests.

•                     The resides test (otherwise known as the ordinary concepts test)

•                     The domicile test

•                     The 183 day test

•                     The Commonwealth superannuation fund test

We have considered your circumstances, and conclude that you will be a resident of Australia for the income year ending 30 June 20XX, as follows:

•                     You are a resident of Australia according to the resides test.

•                     You meet the domicile test because your domicile is in Australia and the Commissioner is not satisfied that you have a permanent place of abode outside Australia.

•                     You will not meet the 183 day test because you will not be in Australia for 183 days or more during the 20XX income year.

•                     You do not fulfil the requirements of the Commonwealth Superannuation test.

In your case, you departed Australia in XX/20XX to accompany your spouse to Country Y so that they could provide temporary care for their parent. You intend to return to Australia as soon as your spouse's parent has recovered.

Although you sold your property for financial reasons, you intend to purchase another property to use as your main residence when you return to Australia.

You meet the resides test of residency as your employer has confirmed that your position will still be available when you return to Australia, you have bank accounts in Australia, you have an Australian driver's licence, your name remains on the Australian Electoral Roll, you have Medicare, you have private health insurance in Australia, you and your spouse have close friends in Australia and you are maintaining connections with your children's school parents and leisure groups whilst you are in Country Y.

You meet the domicile test of residency as you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country Y. You do not intend to, nor are you entitled to reside in Country Y indefinitely and you only hold a visa that is valid for a certain period. The Commissioner is also not satisfied that you have a permanent place of abode outside Australia.

Therefore, you will be a resident of Australia for tax purposes for the 20XX income year.

Question 2

Throughout your ownership period, you resided in the property or chose to treat it as your main residence. As a result, you are entitled to the full main residence exemption upon sale of the property.