Edited version of private advice

Authorisation Number: 1052320844575

Date of advice: 23 October 2024

Ruling

Subject: Residency

Question

Are you a resident for tax purposes under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the 20XX income year?

Answer

Yes.

This ruling applies for the following period:

Year ending XX XXXX 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

You are a citizen and resident of Australia.

You have lived in Australia for the last XXX years.

You have been conditionally offered a role at the Company A in Country A.

XX XXXX 20XX - you are required to start this position.

You are applying for an XXX XXXX visa to the Country A.

You are only allowed to stay Country A with this visa for X years and it is not renewable. This visa will be supplied by Country A Department of State.

You do not intend on applying for citizenship or permanent residency in Country A.

You intend on returning to Australia when this employment is completed.

You have no spouse or dependants.

Since 20XX you have been a member of Group A.

You have an Australian Drivers licence.

In XXX 20XX you purchased a flat to live in at Property A.

XX XXXX 20XX you began renting out your flat due to high home loan interest rates. The current tenant has a XX-month lease end XX XXXX 20XX.

You are managing the rental property without a real estate agent. Your personal mail goes to Property A.

You are solely responsible for paying the mortgage on Property A.

XX XXX 20XX you began house sitting rent free in various locations across City A.

You have a mortgage XXXXX Bank, two bank accounts and a credit card with XXXX Australia.

You currently have a job in Australia at Department A.

You are not a Commonwealth of Australia Government employee for superannuation purposes.

You are not a member of the Public Sector Superannuation Scheme (PSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Detailed reasoning

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 a resident of Australia under the resides test for the period 20XX-XX income year based on the following:

•                     You have lived in Australia for the last XXX years.

•                     You are a citizen and resident of Australia.

•                     You have an Australian Drivers Licence.

•                     You are a member of Group A(since 20XX).

•                     You purchased property in XXX 20XX, which you have now rented out.

•                     You are house sitting in City A across various locations.

•                     You have a mortgage, credit card and bank accounts in Australia.

•                     You are employed in Australia with Department A.

Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered.

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 Australia.

You are not entitled to reside in Country A indefinitely and while living in City B you will hold a work permit which is valid for X years.

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 not satisfied that your permanent place of abode is outside Australia because:

•                     You are moving to the Country A for a limited period of time.

•                     You are applying for an XXXXX visa to Country A.

•                     This visa is valid for X-years only and is not renewable.

•                     You intend to return to Australia.

Therefore, you are 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 will not be present in Australia for 183 days or more during the 20XX-XX 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

The details contained in "ZKBN and Commissioner of Taxation [2013] AATA 604 (27 August 2013)", Paragraph 42, show us where the taxpayer was not considered to have abandoned Australia to live permanently in another country.

Those matters demonstrate that the applicant retained a continuity of association with Australia as well as an attitude that Australia continued to be their home in the relevant tax years. Those conclusions are supported by their ownership of a house in Australia until June 20YY as well as a vehicle until 20YY and their storage of personal items in the house and then in a commercial facility in Australia until after the 20YY tax year. their attitude that Australia was their home and their continuing connection to Australia is also supported by their reliance on their Australian address for notices in relation to their contracts for overseas work even, at times, after it had been sold. They also continued to rely on an Australian bank account for disbursements and for their receipt of income payments when overseas. While inertia, as submitted on their behalf, may be part of the reason for the use of an Australia bank account, their reliance thereon demonstrates confidence in and a continuing connection with the Australian arrangement.

You satisfy the resides and domicile tests of residency and so are a resident of Australia for income tax purposes for the year ended XX XXXX 20XX.