Edited version of private advice

Authorisation Number: 1052373389509

Date of advice: 1 March 2025

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes to the relevant future date?

Answer

Yes.

Question 2

Are you required to declare your foreign sourced income in an Australian tax return up until the relevant future date?

Answer

Yes.

Question 3

Are you a resident of Australia for taxation purposes from the relevant future date?

Answer

No.

Question 4

Are you required to declare your foreign sourced income in an Australian tax return from the relevant future date?

Answer

No.

Question 5

Are you required to declare any Australian sourced income in an Australian tax return from the relevant future date?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You went to Country Z to live and work.

You do not intend on returning to Australia to live on a permanent basis.

Your spouse has accompanied you to Country Z and is on a spouse visa which does not allow them to work in Country Z.

You are working for Company Z.

Your contract is for a number of years with the option to renew the contract.

You will be paid by your employer in local currency into a local bank account.

You live in Country Z.

The lease of the property is in your name.

Your employer contributes to your accommodation expenses.

This property is for your sole use.

The property has white goods included in the lease.

You have taken furniture, bedding, clothes, sporting goods, electronics with you.

You have a work visa to enter Country Z.

This visa is for several years and can be renewed.

You are renting out your home in Australia and your child is managing the property in your absence.

You will continue to pay off your mortgage on your Australian property while in Country Z.

You have stored your belongings not taken to Country Z at your sibling-in-law's home.

You have bank accounts and a superannuation fund in Australia.

You are no longer a member of any groups in Australia.

You will remove your name from Medicare.

You have removed your name from the Electoral Roll.

You have notified your bank that you are a non-resident.

You are not eligible to contribute to the PSS or the CSS Commonwealth super funds.

Your spouse is eligible to contribute to the PSS super fund as they work for XXXX.

Your spouse has given notice to their employer that they will resign from their position.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

Section 995-1 of the 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... [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 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.

You have gone to Country Z to live and work.

You do not intend on returning to Australia to live on a permanent basis.

Your spouse is moving to Country Z with you.

You will not be a resident of Australia for taxation purposes under the resides test.

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.

Your domicile of origin is Australia.

It is considered you will not change your domicile during the period of this ruling.

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 considering 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.

The Commissioner is satisfied that you have a permanent place of abode in Country Z.

You are renting a property in Country Z.

You have taken your personal and household items to Country Z with you.

Your spouse will live with you in Country Z.

You do not intend on returning to Australia on a permanent basis.

You will not be a resident under this 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.

You will not be in Australia for more than 183 days from the date you moved to Country Z.

You will not be 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.

You are not a member or eligible to contribute to the PSS or the CSS Commonwealth Super Fund.

However, your spouse is a member and eligible to contribute to the PSS Commonwealth Super Fund.

Your spouse has given notice that they will be resigning from their employment with XXXX on the relevant future date.

Therefore, you will be a resident under this test up until the relevant future date.

You will not be a resident under this test from the relevant future date.

Conclusion:

You will be a resident of Australia for taxation purposes up until the relevant future date.

You will be required to declare your foreign sourced income in your Australian tax return.

You will not be a resident of Australia for taxation purposes from the relevant future date.

You are not required to declare your foreign sourced income in your Australian tax return from the relevant future date.

You are required to declare your Australian sourced income in an Australian tax return and you will be taxed at non-resident rates.