Edited version of private advice

Authorisation Number: 1052370588740

Date of advice: 13 May 2025

Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes as defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

No.

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 YYYY-YY income year from DD MM YYYY, and the YYYY-YY income year.

This ruling applies for the following periods:

Year ending 30 June 20XX

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances

This ruling applies to Person A and Person B (jointly referred to as you).

On DD MM YYYY, Person A was born in Australia.

On DD MM YYYY, Person B was born in Country B.

On DD MM YYYY, Person B obtained Australian citizenship by descent.

You are Australian citizens.

You are married.

Relocation to Country C

On DD MM YYYY, you departed Australia for Country C without a return airline ticket back to Australia.

You hold a one year temporary residency and work permit for Country C which expires on DD MM YYYY. The conditions of the permit are that you are religious workers that have been invited by local religious organisations to support their activities. You intend on renewing the permits.

The purpose of moving to Country C is for humanitarian and religious missionary work.

You intend to stay in Country C for around 10 years.

In YYYY, you formed the intention to make your home indefinitely outside Australia.

Australian assets

You own a number of bank accounts in Australia.

Person B owns a number of shares through a company.

You jointly own a property in Australia.

On DD MM YYYY, the property was rented to a tenant.

The property was your principal place of residence before it was rented out.

You are treating the property as an investment.

You sold your furniture.

Your other property household effects were left with your parents upon your departure from Australia.

Country C & other assets

You do not have any bank accounts in Country C.

You have international bank accounts.

You own a car and general items brought over from Australia such as computers and mobile phones.

Associations with Australia

Your extended family live in Australia.

You do not hold employment in Australia. No job is being held for you upon your return.

You intend to stay with family members or your property when you return to Australia.

You maintain close connections with Australia through donations from individuals, church communities and family ties.

You have contacted the Australian Electoral Commission to withdraw from state elections while requesting to remain enrolled for federal elections, allowing you to vote from overseas.

You have not advised any Australian financial institutions that you are non-tax residents based on advice you had received.

You have not advised any Australian companies with which you hold investments that you are non-tax residents.

You have not advised Medicare or your health insurance provider to have your name removed from their records.

You did not have a capital gains tax event I1 occur to your assets upon ceasing to be an Australian resident.

You are not members of a superannuation scheme established by deed under the Superannuation Act 1990 (the Public Sector Superannuation Scheme).

You are not eligible employees for the purpose of the Superannuation Act 1976 (the Commonwealth Superannuation Schemes).

Association with Country C

You have a signed a contract for a rental apartment in Country C which ends on DD MM YYYY.

You currently have minimal social connections in Country C, having been there for a short period. This is expected to change as you make more friends. Your main social connection is the church you attend weekly, and you do not engage in other regular activities.

You have signed up for a tax file number in Country C.

You have not lodged a tax return in Country C under the advice of the tax authority in Country C. You are still awaiting the decision of your residency status from the tax authority. Person A was verbally advised by an Officer of the tax authority that both of you will be tax residents of Country C.

Income

You do not exercise employment in Australia. You understand, as missionaries for a not for profit organisation in Australia, you are considered as volunteers under employment law. You perform your missionary role in Country C.

As volunteer missionaries, you depend on donations from numerous people and churches in Australia. All gifts and donations are processed through your missionary society.

You receive the living allowance from a not-for-profit religious organisation based in Australia. The money you receive from the organisation is reported to the Australian Tax Office as salary and wages where you said you have had tax withheld and an amount of superannuation calculated.

Dependents

You have one dependent child.

Your child has relocated with you to Country C.

Return to Australia

You have made no returns back to Australia since leaving the country.

You intend on returning to Australia every 2 to 3 years for a period of 2 to 3 months with a potential to permanently return in YYYY.

In the YYYY-YY income year, you have spent XX days in Australia.

Assumptions

For the purposes of this ruling, it is assumed that the facts of your situation as outline above will not materially change during the ruling period and will continue until DD MM YYYY.

For the purposes of this ruling, it is assumed that you will not return to Australia for more than 183 days in the YYYY and YYYY income years.

For the purposes of this ruling, it is assumed you will not return to Australia for reasons other than for holidays and to visit family.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 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 for the YYYY-YY income year from DD MM YYYY, and the YYYY-YY income year based on the following:

   • Physical presence

     - you have been physically present in Country C since DD MM YYYY

     - on DD MM YYYY, you departed Australia. You did not hold a return airline ticket upon your departure

   • Intention or purpose

     - your intention upon departure was to live in Country C for around 10 years as a volunteer missionary with the plan to return home to Australia every 2-3 years for 3 months

     - you have established some professional and social ties in Country C and have withdrawn from these in Australia apart from your family relationships here

     - you intend to renew your Country C temporary residency and work permit

   • Behaviour

     - since DD MM YYYY, you have been residing in Country C

     - you informed the Australian Electoral Commission you are residing overseas. You have requested to be removed from state elections but to stay on for federal elections so you can vote overseas

     - you have no day to day routines or habits in Australia

   • Family and business/employment ties

     - your extended family live in Australia

     - you have a spouse and dependant living with you in Country C

     - you maintain family ties with Australia and anticipate nurturing these ties with regular short visits

     - you do not have employment in Australia

     - you volunteer as missionaries in Country C for a missionary society

     - you receive a living allowance from your missionary society

Maintenance and location of assets

   • you own the following assets in Australia:

     - bank accounts

     - shares

     - investment property

     - household effects

   • you own the following assets in Country C and overseas

     - car

     - general items brought over from Australia

     - international bank accounts

     - household effects

Social and living arrangements

   • you maintain close connections with Australia through donations from individuals, church communities and family ties

   • your family will be involved in social activities in Country C

   • you have a signed a contract for a rental apartment in Country C

   • you have commenced and are maintaining social connections with friends and missionary colleagues in Country C

   • you have signed up for a tax file number in Country C.

While you maintain connection with Australia through family, church and investment, you will not have settled purpose in Australia as you intend on living in Country C, with your spouse and dependant for an extended period, performing missionary work in that country.

As a result, you are not a resident under the resides test for the YYYY-YY income year from DD MM YYYY, as well as the whole YYYY-YY income year.

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, Person A was born in Australia and Person B was born in Country B. Person B obtained Australian citizenship by decent several months after being born. Your domicile of origin is Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquired a domicile of choice in Country C. You are not entitled to reside in Country C indefinitely and while living in Country C, you only hold a visa valid until DD MM YYYY which can be renewed each year for a maximum of one year.

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:

   • you currently lease an apartment in Country C

   • your intention is to live in Country C for around 10 years as volunteer missionaries and plan to return home to Australia every 2-3 years for 3 months

   • your intention is to renew your Country C visa yearly for the next 10 years

   • your Australian property contract is currently leased from DD MM YYYY to DD MM YYYY

   • you have cancelled all transactions related to living in Australia other than voting in federal elections

   • your family (including parents) reside in Australia.

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 not be present in Australia for 183 days or more during the YYYY-YY income year and will not be present for 183 days or more during the YYYY-YY 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 Superannuation Scheme A or Superannuation Scheme B 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 YYYY-YY income year from DD MM YYYY, and the whole YYYY-YY income year.