Edited version of private advice

Authorisation Number: 1052363558798

Date of advice: 21 February 2025

Ruling

Subject: Residency

Question 1

Will the Taxpayer be an Australian resident for the period from DD MM YYYY to DD MM YYYY pursuant to the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer 1

Yes.

Question 2

Will the Taxpayer be an Australian resident for the period from DD MM YYYY to DD MM YYYY pursuant to the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer 2

Yes.

This ruling applies for the following periods:

DD MM YYYY to DD MM YYYY

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances

Background facts

The Taxpayer was born on DD MM YYYY in XXX Australia.

The Taxpayer attended all their schooling and university studies within Australia.

The Taxpayer married at age xx and settled in XXX Australia with their spouse in a purchased marital home.

The Taxpayer has x children, now adults.

Employment

The Taxpayer was fully employed at all relevant times while in XXX Australia. The Taxpayer left their employment in YYYY to invest capital on a full-time basis for themselves and their family.

The Taxpayer manages their own investments. The Taxpayer is not otherwise gainfully employed either in Australia or overseas.

Marriage, Separation and Divorce

The Taxpayer's marriage broke down irretrievably in YYYY and they separated (the Separation) and their divorce was finalised in MM YYYY.

The Taxpayer moved out of the marital home after the Separation and they moved most of their belongings into a XXX storage unit, with the remainder into their parent's home in XXX in XXX Australia.

Following the Separation, the Taxpayer stayed briefly their parent in XXX Australia.

The Taxpayer travelled extensively overseas following the Separation.

The Taxpayer sold the marital home in MM YYYY.

The Taxpayer maintains a good relationship with their ex-spouse and children. They now live in a rented home in XXX, with a view to purchasing a new home with the partial proceeds from the sale of the marital home.

Recent Travel

The Taxpayer has travelled overseas extensively since the Separation.

The Taxpayer has travelled to many overseas countries from MM YYYY through to MM YYYY (date of ruling application).

The Taxpayer has spent more time outside of Australia than within Australia.

The Taxpayer stays in short-term accommodation and hotels whilst overseas.

The Taxpayer regularly returns to Australia to visit their children and their parents for events like Christmas, Easter, New Years and wedding celebrations. While back in Australia, the Taxpayer also manages the in-person requirements of their Australian based investments.

The Taxpayer maintains their Australian investments from a laptop, and the derived income assists their living expenses whilst traveling overseas.

The Taxpayer travels relatively light with a bag of clothes, laptop, mobile phone and a passport.

The Taxpayer has not taken any lease or long-term tenancy at any fixed address overseas.

In the year MM YYYY through to MM YYYY, the Taxpayer spent xx% of their time in Australia, and the remainder in overseas countries.

New relationship

The Taxpayer has been in a relationship with a person from XYZ (new partner) since early YYYY.

The Taxpayer is having trouble securing an Australian visa for their new partner, with applications for longer visas being rejected up to now:

•                     a 1-year tourist visa application was rejected, and

•                     a 3-month tourist visa application was recently rejected.

The Taxpayer wishes to bring their new partner to Australia to enjoy Australian life so that the new partner can understand and decide if Australia is where they would like to reside with the Taxpayer.

Behaviour within Australia

When returning to Australia, the Taxpayer:

•                     Spends time with their adult children, parents, family and friends

•                     Marks their residency card as an Australian resident returning/leaving

•                     Retains their electoral roll address as their parent's address in XXX Australia

•                     Lists their address for correspondence as their parent's address where the Taxpayer has kept possessions

•                     Uses their current Australian driver's license and intends to keep it current

•                     Uses their registered motor vehicles and intends to keep those registrations current

•                     Accesses their storage unit and intends to retain its contents

•                     Maintains their Australian private health insurance and Medicare registration

•                     Retains an Australian bank account

•                     Retains an active gym membership in Australia

•                     Uses their Australian registered mobile phone with YYY at $XX/month e-sim

•                     Lodges an Australian tax return as an Australian resident.

•                     The Taxpayer did not advise any Australian financial institutions that they are a foreign resident

•                     The Taxpayer is not a Commonwealth of Australia government employee for superannuation purposes

•                     The Taxpayer is not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990

•                     The Taxpayer is not an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976

Future plans

The Taxpayer is unsure of their permanent plans post-divorce.

The Taxpayer intends to holiday around XYZ, visiting various countries, for at least the next xx years as their savings and investment earnings allow them to do so.

The Taxpayer intends to pursue the relationship with their new partner by spending time in XYZ, and if the new partner obtains an Australian visa, the Taxpayer's time in Australia will increase.

The Taxpayer intends to return to Australia full-time but is unsure when that will be.

Information provided

You have provided a number of documents containing detailed information in relation to the Taxpayer's application, including:

•                     Private Binding Ruling (PBR) Application, dated DD MM YYYY

•                     Responses to request from further information, dated DD MM YYYY

We have referred to the relevant information within these documents in applying the relevant tests to your circumstances.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

All legislative references are to the Income Tax Assessment Act 1936 (ITAA 1936) unless otherwise stated.

Question 1

Summary

The Taxpayer is a resident of Australia for the purposes of the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 for the income year ended DD MM YYYY.

Detailed reasoning

Residency for Tax Purposes

Subsection 995-1(1) of the Income Tax Assessment Act (ITAA 1997) provides that a person is an 'Australian resident' if that person is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The definition of 'resident' is outlined in subsection 6(1) of the ITAA 1936 as follows:

(a)           a person, other than a company, who resides in Australia and includes a person:

(i)            whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia;

(ii)           who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia; or

(iii)          who is:

(A)          a member of the superannuation scheme established by deed under the Superannuation Act 1990; or

(B)          an eligible employee for the purposes of the Superannuation Act 1976; or

(C)          the spouse, or a child under 16, of a person covered by sub-subparagraph (A) or (B).

The definition in subsection 6(1) of the ITAA 1936 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These statutory tests are commonly referred to as:

(i)            the 'residence according to ordinary concepts' test (the 'resides test')

(ii)           the 'domicile and permanent place of abode' test (the 'domicile test')

(iii)          the '183 day' test, and

(iv)          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, the 183-day test and the Commonwealth superannuation fund test).

Consequently, only one of the above four statutory tests needs to be met for an individual to be considered an Australian resident for taxation purposes.

The 'Resides' Test

The term 'resides' is not defined in either the ITAA 1936 or the ITAA 1997. Taxation Ruling TR 2023/1 "Income Tax: Residency test for individuals" (TR 2023/1) provides guidance on the Commissioner's interpretation of the ordinary meaning of the word 'resides' as set out in subsection 6(1) of the ITAA 1936.

Paragraph 10 of TR 2023/1 states that the residency status of a taxpayer is a question of fact based on an individual's connection to Australia.

To determine the ordinary meaning of the word 'resides', dictionary definitions of the term can be relied on. The following definitions are provided in paragraph 19 of TR 2023/1:

The Macquarie Dictionary defines 'reside' 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'.

Paragraph 25 of TR 2023/1 provides that the physical presence or length of time in Australia alone is not decisive of whether an individual resides in Australia and an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing in Australia. Similarly, the quality and character of a taxpayer's behaviour while in Australia assists in determining whether the individual resides here, as per paragraph 20 of TR 2023/1.

Paragraph 20 of TR 2023/1 provides that the following factors are useful in describing the quality and character of an individual's behaviour:

•                     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, and

•                     social and living arrangements.

Paragraph 41 of TR 2023/1 explains that when looking at an individual's behaviour, their behaviour relevantly includes the way they live as part of the regular order of their life. If the way they live reflects a degree of continuity, routine or habit, coupled with other factors such as intention, it may be consistent with residing in Australia.

Paragraph 31 of TR 2023/1 states that an individual's intention, purpose or reason for being in Australia assists in determining whether an individual resides here. Paragraph 33 of TR 2023/1 provides that a settled purpose, such as pre-arranged long-term employment or a course of education, may support an intention to reside in Australia.

The meaning of 'family and business/employment ties' is explained in paragraphs 46 to 50 of TR 2023/1. Paragraph 46 of TR 2023/1 states that the presence of an individual's family is a factor that may indicate that individuals are residing in Australia.

When considering the maintenance and location of assets, paragraph 51 of TR 2023/1 provides that occupying a dwelling in Australia that the individual owns or is purchasing, suggests establishment of a home in Australia. The presence of other assets in Australia, such as motor vehicles, superannuation investments and bank accounts also add further weight to the individual having established behaviour consistent with residing here.

Paragraph 53 of TR 2023/1 states that social and living arrangements can also be considered in determining whether an individual resides in Australia for tax purposes. This factor involves the consideration of the way individuals interact with their surroundings, which may include joining sporting or community organisations, or enrolling children in school, during their stay in Australia.

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.

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 the place remains "home": see Norman v Norman (No 3) (1969)

16 FLR 231 at 235... [W]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 also noted various factors commonly inform a connection in Taxation Ruling TR 2023/1 and considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:

•                     physical presence

•                     intention or purpose of presence

•                     family and business/employment ties

•                     maintenance and location of assets, and

•                     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 ordinary concepts test is 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: Logan J in Pike v Commissioner of Taxation [2019] FCA 2185 at 57 reminds us that 'it is no part of the ordinary meaning of reside in the 1936 Act that there be a 'principal' or even 'usual' place of residence. ... It is important that ... 'resident' not be construed and applied as if there were such adjectival qualifications.' For this reason, the test is not about dominance or exclusivity.

The 'domicile' test

An individual is a resident of Australia according to the domicile test if the individual is domiciled in Australia, unless the Commissioner is satisfied that the individual has a permanent place of abode outside of Australia.

As set out in paragraphs 56 - 62 in TR 2023/1, 'domicile' is described by the Commissioner as follows:

"Domicile" is a legal concept to be determined according to the Domicile Act 1982 and to the common law rules which the courts have developed in the field of private international law. The primary common law rule is that a person acquires at birth a domicile of origin, being the country of his or her father's permanent home. This rule is subject to some exceptions. For example, a child takes the domicile of his or her mother if the father is deceased or his identity is unknown. A person retains the domicile of origin unless and until he or she acquires a domicile of choice in another country, or until he or she acquires another domicile by operation of law...

Accordingly, your domicile 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.

A person acquires a domicile of choice in a country by being lawfully present there with the intention of remaining in that country indefinitely. The two elements of physical presence and intention must occur at the same time.

Davies and Steward JJ in Harding FFC stated as follows at [29] and [30] with respect to 'domicile':

29.          It is appropriate to deal with Mr Harding's appeal first. The primary judge adverted to a tension which he considered seemed to exist between the concepts of "domicile" and that of a "permanent place of abode". On one view, if a person chooses to make her or his permanent place of abode outside of Australia, one might also think that that person had ceased to be domiciled in this country. Some of the criteria for determining a person's domicile may now be found in the Domicile Act 1982 (Cth) (the Domicile Act). Section 10 of that Act provides:

The intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country.

30.          Part of the tension observed by the primary judge may be the product of possible differences between the common law concept of a person's domicile and the consequences of the statutory changes made to that common law by the Domicile Act. In Terrassin v Terrassin (1968) 14 FLR 151, Selby J observed that a person alleging a change of domicile had to prove by "clear and cogent evidence that the change has taken place" (at 154-155). His Honour referred to the decision of Lord Curriehill in Donaldson v M'Clure (1857) 20 D. 307, where his Lordship said:

... it is proper to keep in view what is meant by an animus or intention to abandon one domicile for another. It means something far more than a mere change of residence. It imports an intention not only to relinquish those peculiar rights, privileges, and immunities which the law and constitution of the domicile confer on the denizens of the country,-in their domestic relations ... in their purchases and sales and other business transactions ... in their political or municipal status,-and in their daily affairs of common life; but also the laws by which the succession to property is regulated after death. The abandonment or change of a domicile is therefore a proceeding of a very serious nature, and an intention to make such an abandonment requires to be proved by satisfactory evidence.

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 based on 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; and

•                     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.

The '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.

The 'Commonwealth Superannuation Fund' 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 circumstances

Question 1:

The 'domicile' test

Paragraph 15 of TR 2023/1 confirms that an individual is a resident if they meet any one of the residency tests contained in subsection 6(1) of the ITAA 1936. If an individual meets one of the tests for residency, it does not matter if they do not meet any of the other tests.

The Taxpayer has requested a ruling to determine if they are an Australian resident for the period from DD MM YYYY to DD MM YYYY pursuant to the domicile test under subsection 6(1) of the ITAA 1936. The Taxpayer has not asked to be considered under the other 3 tests under subsection 6(1) of the ITAA 1936. The definition in subsection 6(1) of the ITAA 1936 offers 4 tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes.

The Taxpayer was born in XXX Australia in YYYY and attended all their schooling and university studies within Australia.

The Taxpayer married and settled in XXX Australia with their spouse in a purchased marital home. The Taxpayer has x children, now adults, who live in a rented home in XXX Australia with their other parent.

The Taxpayer moved out of the marital home after the separation in MM YYYY and moved most of their belongings into a storage unit in XXX Australia, with the remainder into their parent's home in XXX Australia. The majority of the Taxpayer's assets are stored in XXX Australia permanently. The marital home was sold in MM YYYY.

The Taxpayer maintains a good relationship with their ex-spouse and x children. They now live in a rented home in XXX Australia, with a view to purchasing a new home with the partial proceeds from the sale of the marital home.

The Taxpayer's domicile 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.

A person acquires a domicile of choice in a country by being lawfully present there with the intention of remaining in that country indefinitely. The two elements of physical presence and intention must occur at the same time.

The taxpayer regularly returns to Australia and does not stay in any one country overseas indefinitely. The Taxpayer has a partner from XYZ, for who they are trying to secure a visa in order to reside in Australia.

The Taxpayer does not have any intention to reside in a permanent way outside of Australia.

Permanent place of abode

Under the domicile test, a Taxpayer is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied that their permanent place of abode is outside Australia.

The type of accommodation and the taxpayer's length of stay in any one country, does not support that they have a permanent place of abode outside of Australia. Given the temporary and transitory nature of their stay in multiple countries, it cannot be viewed that the Taxpayer had a fixed and habitual place where they would live permanently.

This pattern of travel combined with the taxpayer's regular returns to Australia, where the Taxpayer maintains family ties, indicate the Taxpayer has no intention to reside in a permanent way outside of Australia; therefore, the taxpayer did not definitely abandon, in a permanent way, living in Australia.

As a result, the Commissioner is not satisfied that the Taxpayer's permanent place of abode was outside Australia during the relevant time.

Therefore, the Taxpayer is a resident of Australia under the 'domicile' test for the period from DD MM YYYY to DD MM YYYY.

Conclusion

The Taxpayer is a resident of Australia for the purposes of the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 for the income year ending DD MM YYYY.

Question 2

Summary

The Taxpayer is a resident of Australia for the purposes of the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 for the income years ended DD MM YYYY and DD MM YYYY.

Detailed reasoning

For the same reasons set out in question 1 above, to the extent the Taxpayer's travel from country to country remains temporary and transitory in nature, and their ties with Australia are maintained, the Taxpayer is a resident of Australia for the purposes of the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 for the income years ended DD MM YYYY and DD MM YYYY.

This is based on the assumption the Taxpayer's pattern of travel will remain similar to that in YYYY and YYYY income years with no material changes.

Conclusion

The Taxpayer is considered to be tax resident of Australia for the purposes of the domicile test under subsection 6(1) of the Income Tax Assessment Act 1936 for the income years ending DD MM YYYY and DD MM YYYY.