Edited version of private advice

Authorisation Number: 1052324708478

Date of advice: 14 November 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 2024 income year?

Answer

Yes.

This ruling applies for the following period:

Year ending XX June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

You were born in Country A and are a citizen of this country.

Your spouse owned a house in Country A which was sold before you moved to Australia.

On XX XXXXX 20XX you arrived in Australia and initially stayed with family in their house in Suburb A.

You arrived in Australia on a XX Visa as your spouse has come here to study an XXX at University A. This was full time study, which your spouse obtained the qualification A.

On XX XXXXX 20XX you and your spouse moved into property A which is owned by family. You pay for the water and electricity charges, and do not pay any rent.

On XX XXXXX 20XX, you commenced work with Company A as a receptionist and scribe for 2 Doctors. You are employed as a casual employee.

On XX XXXXX 20XX you returned to Country A for your Parent's birthday.

On XX XXXXX 20XX you returned to Australia.

On XX XXXXX 20XX you were both granted a temporary visa (subclass XXX). This visa expires XX XXXXX 20XX.

Your intention initially was to return to Country A after your spouse completed studies, however you have decided to stay in Australia.

You do not provide financial support to your family in Country A.

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

You have joined Club 1 and are members at Club 2 in Australia.

You have a driver's licence in both Australia and Country A.

You have a bank account in Country A with Bank 1.

You have a bank account at Bank 2 in Australia.

You bought all your household goods in Australia.

You shipped your personal effects in a container to Australia.

You and your spouse are not eligible Commonwealth of Australia Government employees for superannuation purposes.

You and your spouse are not members of the Public Sector Superannuation Scheme (PSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

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 XX XXXX 20XX to XX XXXX 20XXbased on the following:

•         you have been physically present in Australia in the 20XX income year apart from a visit to Country A for less than X weeks.

•         you have been residing in the same property since XX XXXXX 20XX

•         this property is owned by family and whilst you do not pay rent, you pay for utilities such as water and electricity.

•         your intention is to remain in Australia.

•         since XXXXX 20XX you have been employed casually for Company A as a Receptionist and scribing for 2 of the Doctors.

•         you have a bank account in Australia.

•         you purchased all your household goods in Australia and have shipped all your personal effects in Country A to Australia

•         your spouse sold their property in Country A, which was your home together, before moving here

•         you have joined Club A and are members at Club B in Australia.

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 Country A and your domicile of origin is Country A. You immigrated to Australia on XX XXXXX 20XX.

It is considered that you did not abandon your domicile of origin in Country A and acquire a domicile of choice in Australia.

Therefore, your domicile is Country A 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 been in Australia for 183 days or more in the 20XX income year. Therefore, you will be a resident under this test unless the Commissioner is satisfied that your usual place of abode was outside Australia and you do not have an intention to take up residence in Australia.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836.

Application to your situation

The Commissioner is not satisfied that your usual place of abode was outside Australia for the 20XX income year based in the following:

•         you resided in Australia in the 20XX income year apart from a visit to Country A for less than 3 weeks.

•         you have lived at the same property in Australia since XX XXXXX 20XX

•         your home, owned by your spouse in Country A, was sold before you came to Australia.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Application to your situation

The Commissioner is satisfied that you did intend to take up residence in Australia for the 20XX income year because:

•         you have maintained employment with Company A as a receptionist, in a casual position since XXXXX 20XX, and you intend to enrol in a management course within the next XX months.

•         you have been residing in Australia since your arrival on XX XXXXX 20XX except for a short visit back to Country A for your Parent's birthday.

•         while your intention initially was to return to Country A after your spouse completed studies, you have decided to stay in Australia.

•         you have lived at the same property in Australia with your spouse since XX XXXXX 20XX

•         you have been granted a further temporary visa which ceases in XXXXX 20XX

•         you shipped your personal effects when you moved from Country A and purchased all household goods in Australia.

•         you have taken up memberships with Club 1 and Club 2

•         you have bank accounts and a driver's licence in Australia.

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

You satisfy the resides and 183-day tests of residency and so are a resident of Australia for income tax purposes for the year ended XX XXXXX 20XX.