Edited version of private advice

Authorisation Number: 1052378780591

Date of advice: 02 April 2025

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for tax purposes?

Answer 1

No.

This ruling applies for the following period

Year ending 30 June 20XX

The scheme commenced in:

20XX

Relevant facts and circumstances

You were born in country A.

You are a dual citizen of country A and Australia.

As a child you moved with your family from country A to Australia.

You acquired Australian citizenship.

You departed Australia alone, with the intention of moving permanently to country B to marry your partner and start a family.

You arrived in country B on a tourist visa, then a working visa, currently a marriage visa and you have applied for a golden visa which allows you to stay for over 10 years.

You are employed with an Australian company.

Your employer provides software solutions for your clients.

Your employer has a nominal office in X however, staff work remotely in multiple states of Australia and globally and contracts out work to a company overseas.

Your employer has clients in Australia, country C and country D.

There are no clients in country B.

Your general duties include:

•                project planning, team management and client liaison

•                working with staff in Australia, country C and country D (contractors)

•                liaising with clients in Australia, country C and country D to achieve business goals and objectives

•                ensuring client satisfaction, product deployment, training and support

All your work decisions, oversights and communications are executed from country B.

Your role is designed to be remote and can theoretically be performed anywhere with adequate technology.

You carry out your work remotely in country B for your Australian employer and you have not travelled to Australia for work purposes.

Your employer pays superannuation and withholds income tax.

Your salary is paid in Australian dollars, into an Australian bank account.

You were married in country B.

Your spouse is a citizen of country C and has a Golden Visa which allows a 10-year residency in country B.

Your spouse is employed.

Your child was born in country B and has a golden visa.

Your child has dual citizenship in country A and C.

You live in country B in a long-term rental with your spouse and child. The lease is under your spouse's name.

You own a furnished property in Australia, where a parent lives rent free.

You have family connections in Australia.

You have a bank account, an investment fund & own cryptocurrency in Australia.

You have not advised the Australian Electoral Office to have your name removed from the electoral roll but have not voted since departing.

You have not advised Medicare to remove your name from their records to date.

You have not advised any Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax could be deducted.

You have not advised any Australian companies with whom you have investments that you are a foreign resident.

You have not lodged tax returns in country B.

There is no double tax agreement between Australia and country B.

You have no intention of returning to Australia permanently.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1936 section 6-5

Income Tax Assessment Act 1936 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 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.

Application to your situation

You are not a resident of Australia under the resides test for the period XXXX to XXXXincome yearsbased on the following:

•                You and your spouse maintain a rental property in country B where you stay together with your child.

•                You have established an abode in country B where you stay in long-term rental accommodation with your spouse and child.

•                You have established professional and social connections in country B with various friends and social organisations.

•                You are considered a non-resident for tax purposes under the resides test because:

o        you maintain strong family ties with your spouse and child in country B

o        you have no intention of returning to Australia to live

o        you have social living arrangements in county B.

In your case, you are still a citizen of Australia and moved to country B, on a tourist visa. Based on the information you have provided; the Commissioner is satisfied that you are not residing in Australia according to ordinary concepts. This may change if you decide to return to Australia and meet the residency test for tax purposes.

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.

In your case, you were born in country A and your domicile of origin is country A. You immigrated to Australia and became an Australian citizen.

It is considered that you abandoned your domicile of origin in 19XX and acquired a domicile of choice in Australia. You were not entitled to reside in country B indefinitely and while living in country B, you only held a work and marriage visa which was valid for a limited time. You have now applied for a golden visa which expires after a fixed term of 10 years.

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 lease and live in a long-term rental property in country B with your spouse

•                you have not left country B since you arrived in 20XX, except for short holiday periods

•                you intend living in country B for a considerable and indeterminable period of time with your spouse.

The duration and continuity of your presence in country B supports the argument that you established a long-term place of abode in country B. While you are a citizen of Australia, this does not outweigh the enduring association and connection you have, and maintain, in country B.

Whilst the question of a usual place of abode is a question of fact, generally the phrase is interpreted as the abode customarily or commonly when you are physically in a country.

Your place of abode does not have to be fixed but must have the attributes of a place of residence or a place to live. Since 20XX, your usual place of abode is country B.

Therefore, while you are a citizen of Australia, the Commissioner considers you have established a permanent place of abode outside Australia for tax purposes in country B since 20XX.

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-to-20XX income years. You have, however, been present in country B for more than 183 days in 20XX until the 20XX income years. 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.

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

On XX 20XX, you moved to country B on a tourist visa and since then have lived and worked there on various visas. You got married to your spouse who lives and works in country B on a golden visa, and you had a child, born in country B. You intend to stay in country B with them and have applied for a golden visa which allows you to stay for up to 10 years.

You have established long term family and social relationships in country B, and you have no intention of returning to Australia.

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 30 June 20XX-to-20XX.

Therefore, you became a non-resident of Australia for tax purposes during the 20XX-20XX tax year. However, this may change if you decide to return to Australia and meet the residency test for tax purposes at a future date.