Edited version of private advice

Authorisation Number: 1052381488799

Date of advice: 16 May 2025

Ruling

Subject: Residency

Question 1

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

Yes.

Question 2

Will your remuneration from your employment at Company A in Country A be taxable only in Australia under the tax treaty between Australia and Country A?

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:

XX XX 20XX

Relevant facts and circumstances:

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You were born in Australia, and always lived in Australia.

You are an Australian citizen, with no spouse and no dependants.

You are not a citizen of any other country.

On XX 20XX you departed Australia to Country A having been granted a Temporary Visa.

On XX XX 20XX, you started employment in Country A with an Australian Government organisation on a 2-year contract.

This contract will terminate automatically without any notice on XX XX 20XX unless previously terminated.

You are employed in Position A on a full-time basis.

In Position A, you:

•                     undertake periodic research, analysis and reporting on Country A policy issues

•                     provide some executive, administrative and organisational support to the section to promote and deliver Australia's policy objectives within Country A.

You state that you relocated at your own expense.

Prior to departing, you worked for a number of years for the Australian Government and took annual leave from this role until XX XX 20XX. You are on leave without pay from XX XX 20XX until XX XX 20XX.

You intend to return to Australia at the end of the 2-year contract and resume employment with the Australian Government. You have not booked your return ticket yet.

You intend to live in a share house in Country A.

You maintain an Australian bank account.

You also maintain a bank account in Country A.

You own shares listed on the Australian Stock Exchange (ASX).

You are not a member of the Commonwealth Superannuation Scheme (CSS) or the Public Sector Superannuation Scheme (PSS).

You hold a Superannuation account with Company C.

You are not currently enrolled to study.

You have not removed your name from the Electoral roll and intend to register as an overseas voter.

You have never owned, nor do you currently own any property in Australia.

You were renting prior to leaving Australia and had a lease in your name. You gave notice to the landlord, and ended the lease prior to leaving Australia

You placed your belongings in a storage facility In Australia prior to leaving.

You have parents, siblings and friends in Australia.

Assumption

You don't intend to be in Australia for 183 days or more in the 20XX and 20XX income years.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 995-1

International Tax Agreements Act 1953 section 4

International Tax Agreements Act 1953 section 5

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 or 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 a resident of Australia under the resides test for the period XX XX 20XX to XX XX 20XX based on the following:

•                     On XX XX 20XX, you departed Australia, to work at an Australian Government organisation in Country A.

•                     You intend to return to Australia once the 2-year work contract ends and resume employment with the Australian Government.

•                     You are on leave without pay from your position with the Australian Government.

•                     You have placed your belonging in a storage unit in Australia.

•                     Your parents, siblings and friends live in Australia.

•                     In Australia, you hold a bank account, belongings, stocks and a superannuation fund.

•                     You continue to leave your personal effects and belongings in Australia, even while in Country A.

•                     You remain enrolled with the Australian Electoral Commission and will apply to vote as an overseas voter.

Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered.

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, you were born in Australia and your domicile of origin is Australia.

It is considered that you did not abandon your domicile of origin in Australia and acquire a domicile of choice in Country A. You were not entitled to reside in Country A indefinitely and while living in Country A, you only hold a temporary visa valid for 2-years. Your intention is to return to Australia once your visa expires.

Therefore, your domicile remains in 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 (Harding) 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, that is, 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

As mentioned above in relation to the Harding case, one of the two key considerations in determining whether a taxpayer has their permanent place of abode outside Australia is whether the taxpayer has 'definitely abandoned, in a permanent way, living in Australia'.

Although, during the period from XX XX 20XX to XX XX 20XX, you are employed in Country A, in share house accommodation with the majority of your time outside Australia, we note that:

•                     your parents, siblings and friends still live in Australia

•                     you have placed all your belongings in a storage unit in City A

•                     you were on annual leave until XX XX 20XX from your role in the Australian Government and are on leave without pay until XX XX 20XX

•                     you intend to return to Australia from Country A after your 2-year Temporary Visa expires

•                     you maintain an Australian bank account and have stocks on the ASX

•                     you have remained on the Electoral roll as an overseas voter.

The Commissioner is not satisfied that your permanent place of abode is outside Australia because:

•                     it is considered that the above factors together demonstrate you will maintain a durability of association with Australia

•                     you have not definitely abandoned, in a permanent way, living in Australia.

Therefore, you are 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 have been in Australia for 183 days or more in the 20XX income year. Therefore, you will be a resident under this test unless the Commissioner is satisfied that your usual place of abode was outside Australia and you do not have an intention to take up residence in Australia.

You will not be present in Australia for 183 days or more during the 20XX and 20XX income years. Therefore, you are not a resident under this test for these years.

Usual place of abode

In the context of the 183-day test, a person's usual place of abode is the place they usually live and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.

If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836.

Application to your situation

The Commissioner is not satisfied that your usual place of abode is outside Australia for the 20XX income year based in the following:

•                     while you ended your lease agreement in Australia, it remains your usual place of abode as this is where you have usually live

•                     you have stored your belongings in a storge facility in Australia while you are in Country A

•                     you intend to live in a share house in Country A.

Intention to take up residency

To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here.

Application to your situation

The Commissioner is satisfied that you do intend to maintain your residency in Australia for the 20XX income year because:

•                     you were on annual leave from the Australian Government until XX XX 20XX and will be taking leave without pay from that position until XX XX 20XX

•                     you will be returning to Australia to live and recommence your employment with the Australian Government at the end of your contract in Country A.

Therefore, you are a resident of Australia for the 20XX income year under the 183-day 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

You satisfy the resides and domicile tests for the 20XX, 20XX and 20XX income years.

You also satisfy 183-day test of residency and so are a resident of Australia for income tax purposes for the year ended 30 June 20XX.

Therefore, you remain a resident of Australia for tax purposes for the 20XX, 20XX and 20XX income years.

Double taxation agreement

In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the ITAA 1936 and the Income Tax Assessment Act (ITAA) 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).

Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. Country A's Agreement is listed in section 5 of the Agreements Act.

The relevant Article of the Convention between the Government of Australia and Country A for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains [2023] ATS 22 (Country A DTA) is Article 18 relating to Government Service.

Article 18(1) provides:

1. Salaries, wages and other similar remuneration, other than a pension or annuity, paid by a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who:

(a) is a national of that State; or

(b) did not become a resident of that State solely for the purpose of rendering the services.

Application to your situation

In your case, you are not a national of Country A and were not a resident of Country A prior to commencing employment with an Australian Government organisation in Country A.

Australia therefore has the taxing right to this remuneration, which is to be reported only in your Australian tax returns for years ending 30 June 20XX to 30 June 20XX.