Edited version of private advice

Authorisation Number: 1052363261609

Date of advice: 26 February 2025

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the relevant period?

Answer

No.

This ruling applies for the following periods:

Year ending XX XXXX 20XX

Year ending XX XXXX 20XX

Year ending XX XXXX 20XX

Year ending XX XXXX 20XX

Year ending XX XXXX 20XX

Year ending XX XXXX 20XX

The scheme commences on:

XX XXXX 20XX

Relevant facts and circumstances

You are currently employed by Company A.

You recently accepted an open-ended contract with Company B, which commences XXXXX 20XX.

You will be moving from City A to Country A as part of this contract.

XX XXXX 20XX, you officially move to Country A.

You have not received an end date for this assignment, it is likely the duration will be XX-XX years. There is an option for this to be extended further, given this is an open-ended contract.

Your spouse will be relocating to Country A with you.

You and your spouse are Australian Citizens.

You have no other citizenships or permanent residencies.

You will be on a XXXXX pass which is valid for XX years and can be renewed for up to XX years thereafter.

You and your spouse have XXX children, aged XX and XX. As they are finishing high school and starting university, they will not come with you to Country A.

Your children will live in the family home in City A and visit Country A in their semester breaks. You and your spouse own this home; however, it is under your name. The family home has been your primary residence whilst living in City A.

Your spouse intends to travel to Australia occasionally to visit the children and check on their welfare. There are no scheduled visits yet, your spouse will only go as required as you would prefer the children to visit you in Country A.

You do not intend to holiday in Australia frequently, unless required to do so for business purposes.

You intend to enter a long-term lease whilst you are living in Country A.

You and your spouse intend to bring most of your personal items to Country A, such as clothes and small personal effects, with the larger items such as white goods and furniture, they are to remain in your City A home for the children to use.

You own a vehicle which you intend to give to your children to use in City A.

You intend to purchase a new vehicle in Country A.

You may occasionally be required to travel back to Australia for business purposes, you will continue to look after Australia as one of your many regions as part of your role with Company A.

You will advise the Australian Electoral Commission (AEC) that you and your spouse will be residing in Country A for a duration of time.

You and your spouse intend to establish a way of life in Country A through engaging in social activities and joining membership clubs, assimilating to the Country A culture.

You will be treated as a tax resident for Country A tax purposes.

You will be on the Country A payroll, with your salary being deposited into a Country A bank account. You may transfer money at times to Australia for maintenance of your City A home as these are costs that the children cannot incur.

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.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 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 not a resident of Australia under the resides test for the period XX XXXXX 20XX - XX XXXX 20XXbased on the following:

•                     You accepted an open-ended contract with your current employer Company A to work with Company B.

•                     You will be moving from City A to Country B as part of this contract.

•                     The duration of this assignment is XX-XX years, which could be extended given this is an open-ended contract.

•                     Your spouse will be moving to Country A with you.

•                     You and your spouse intend to take most of your personal effects.

•                     You and your spouse intend to enter a long-term lease in Country A.

•                     You do not intend to return to Australia for a holiday unless it is for business purposes, even though your adult children will still reside in the family home in City A.

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

It is considered that you will not abandon your domicile of origin in Australia and acquire a domicile of choice in Country A. You are travelling with an XXXX pass which is valid for XX years and can be renewed for XX years thereafter. The visa you have does not let you live there permanently, unlike a PR visa or being a citizen of that country.

Therefore, your domicile is still 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:

•                     You accepted an open-ended contract with your current employer to work in Country B.

•                     You will be moving from City A to Country B as part of this contract.

•                     You and your spouse are shipping your personal items such as clothing and personal effects to Country A.

•                     You are entering into a long-term lease in Country A.

•                     You intend to establish a way of life in Country A, engage in social activities and join membership clubs.

•                     You will advise the Australian Electoral Commission that you and your spouse will be residing overseas for a duration of time.

Therefore, 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 will be in Australia for over 183 days in the 20XX income year.

However, the Commissioner is satisfied that as of XX XXXX 20XX your usual place of abode is overseas, and you do not intend to take up residence in Australia.

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 years ended XX XXXX 20XX-20XX.