Edited version of private advice

Authorisation Number: 1052351484363

Date of advice: 16 January 2025

Ruling

Subject: Residency

Question 1

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

Answer 1

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

On XX/XX/20XX, you relocated to Country X.

Prior to relocating to Country X, you were employed by the Australian entity of Company A.

You commenced working in a role at the Country X entity of Company A in their head office.

You ceased being paid by the Australian entity of Company A and commenced being paid by the Country X entity of Company A upon your arrival in Country X.

Your employment contract does not have a fixed term.

Shortly after your arrival in Country X, you signed a lease for an apartment near your workplace. This lease expires on XX/XX/20XX; however, it is your intention to extend the lease upon its expiration.

Your spouse accompanied you to Country X.

Your spouse entered Country X on a visa.

Your spouse is enrolled in a course in Country X on a full-time basis and is required to attend in person classes. Your spouse expects to graduate from this course in XX/20XX.

You have a bank account in Country X.

You are a member of a club in Country X.

You have made limited trips to Australia since your departure and have spent a period in Australia.

Since arriving in Country X, you have travelled to nearby countries for work purposes and have taken some short leisure holidays to several other countries.

You have an Australian mobile number and a subscription service.

You own a property in Australia which you resided in prior to your departure to Country X. This property is now rented through a real estate agent.

You have an additional property in Australia which is used for investment purposes.

You transported your furniture to Country X.

You do not have any immediate family in Australia.

You intend to remain in your current role and reside in Country X long term.

Your role requires you to travel often to nearby destinations.

In 20XX, you took several trips and travelled for a period. You visited several countries for work and leisure purposes.

When completing incoming passenger cards, you state that your country of residence is Country X and that you do not intend to live in Australia for the next 12 months.

You hold a pass in Country X allowing you to live in Country X permanently. This pass needs to be renewed after a period.

You have an Australian bank account.

You have an Australian driver's licence.

You informed the Australian Electoral Commission that you departed Australia.

You intend to notify Medicare that you have departed Australia.

You have cancelled your private health insurance in Australia.

Your employer in Country X has provided you with private health cover.

You have notified banks in Australia and intend to notify another bank that are a foreign resident.

You receive your mail in Country X.

You are not a member or the spouse of on behalf of whom contributions are being made to the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

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

Reasons for decision

Detailed reasoning

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 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 for the 20XX income yearbased on the following:

•                     Your spouse accompanied you to Country X.

•                     You have leased a property in Country X.

•                     You transported your household effects to Country X.

•                     You hold a pass in Country X, allowing you to live there permanently.

•                     You work for a Country X based company and are undertaking your work from Country X.

•                     You have a bank account in Country X.

•                     You have private health cover in Country X.

•                     You are a member of a club 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 you are living in Country X, you only hold a pass which must be renewed after a period.

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 your permanent place of abode is outside Australia because:

•                     Your spouse accompanied you to Country X.

•                     You have leased a property in Country X.

•                     You transported your household effects to Country X.

•                     You hold a pass in Country X, allowing you to live there permanently.

•                     You work for a Country X based company and are undertaking your work from Country X.

•                     You have a bank account in Country X.

•                     You have private health cover in Country X.

•                     You are a member of a club in Country X.

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

•                     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 have not been present in Australia for 183 days or more during the 20XX 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

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 year ended 30 June 20XX.