Edited version of private advice

Authorisation Number: 1052351455935

Date of advice: 22 January 2025

Ruling

Subject: Residency

Question

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

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX to Year ending 30 June 20XX

The scheme commenced on:

XX/XX/20XX

Relevant facts and circumstances

You were born in Australia and are a citizen of Australia.

On XX/XX/20XX, you departed Australia and travelled to Country X.

You initially entered Country X on Visa A.

You have dependent children who accompanied you to Country X.

You have a child who is of an independent age.

Upon your arrival into Country X, your dependent children were enrolled into school and commenced attending school there in the same month.

You own a property in Australia which you resided in prior to your departure to Country X.

From XX/20XX, your independent child resided in the property. You did not consider the property available to you to live in during this time and when you visited Australia, you did not stay at the property.

You sold most of your household effects prior to departing Australia.

Prior to departing Australia, you worked for Organisation A. You continued to work for Organisation A remotely in Country X.

From your arrival in Country X until XX/20XX, you resided at a friend's property with your dependent children as it was readily available to you due to being vacant due to travel restrictions.

From XX/20XX until XX/20XX, you stayed at a property with your dependent children.

In XX/20XX, you commenced working for Organisation B in an ongoing position. Your work contract states that your work location is in Country X.

You entered into a lease for a term of several years on a property in Country X. The lease commenced on XX/XX/20XX and concludes on XX/XX/20XX. There is an option to review the lease after this time.

You have purchased personal and household effects for your property in Country X.

In XX/20XX, your independent child vacated your property in Australia and the property was leased through a real estate agent. Your remaining personal and household effects were placed into storage.

Your independent child now lives in a nearby province in Country X.

On XX/XX/20XX, you ceased working for Organisation A.

On XX/XX/20XX, Organisation B promoted you and you continued to perform your work remotely from Country X.

You visit Australia annually for short holidays and stay with family and friends. There was one exception, from XX/XX/20XX until XX/XX/20XX, you undertook a house swap exchange, where you and your family stayed at an exchanger's property in Australia and the exchanger stayed at your property in Country X.

You have an additional investment property in Australia which is also rented through a real estate agent on a long-term contract.

You enter Country X on Visa B, which is renewable after a period. Your current visa was issued on XX/XX/20XX and expires on XX/XX/20XX.

You have a bank account in Australia.

You have a driver's licence in Australia.

You have a bank account in Country X.

Your involvement with your employer in Country X has resulted in involvement within the community in Country X.

You are involved with your children's school in Country X.

Your family is involved with sporting and recreation clubs in Country X.

You cancelled your private health insurance upon your departure from Australia.

You have notified the Australian Electoral Roll that you are outside of Australia.

You have notified your banks in Australia that you are a foreign resident.

You purchased a scooter in Country X.

You have a motorbike licence in Country X.

You are a resident of Country X for taxation purposes.

You have lodged foreign tax returns.

You did not own a motor vehicle when you were living in Australia and instead, you drove a vehicle that belonged to your employer. You returned this vehicle prior to departing for Country X.

You have spent a limited number of days per year in Australia since you arrived in Country X.

You intend to reside in Country X for the foreseeable future.

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 the spouse of such a person.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(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 principle or usual place of residence in Australia.

Application to your situation

You are not a resident of Australia under the resides test from XX/XX/20XX based on the following:

•                     Your dependent children accompanied you to Country X.

•                     Your dependent children enrolled in and attended school in Country X shortly after your arrival.

•                     You entered a longer-term lease on a property in Country X.

•                     You have purchased personal and household effects for your property in Country X.

•                     You are undertaking your work from Country X.

•                     You have a bank account in Country X.

•                     You have a motorbike licence in Country X.

•                     You are involved with your children's school in Country X.

•                     You are a member of several sporting and recreational clubs in Country X.

•                     You intend to remain in Country X. for the foreseeable future.

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 Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country X. You are not entitled to reside in Country X indefinitely and while living in Country X you only hold a visa which is valid until XX/XX/20XX.

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 satisfied that from your departure on XX/XX/20XX, your permanent place of abode is outside Australia because:

•                     Your dependent children accompanied you to Country X.

•                     Your dependent children enrolled in and attended school in Country X shortly after your arrival.

•                     From arrival you had settled accommodation before entering into a long-term lease on a property in Country X.

•                     You have purchased personal and household effects for your property in Country X.

•                     You are undertaking your work from Country X.

•                     You have a bank account in Country X.

•                     You have a motorbike licence in Country X.

•                     You are involved with your children's school in Country X.

•                     You are a member of several sporting and recreational clubs in Country X.

•                     You intend to remain in Country X. for the foreseeable future.

Therefore, you are not a resident of Australia under the domicile test from XX/XX/20XX.

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 were in Australia for 183 days or more in the 20XX income year. However, from your departure part-way through that year, your usual place of abode has been outside Australia, and you have not intended to take up residence in Australia. Therefore, you will not be a resident under this test for the 20XX income year from the date of your departure.

You have not been present in Australia for 183 days or more during the 20XX and 20XX income years and you do not intend to be present in Australia for 183 days of more during the 20XX, 20XX, 20XX, 20XX and 20XX income years. 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 from your departure on XX/XX/20XX.