Private ruling: Residency
Date of advice: 29 November 2022
Published: 30 January 2023
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for taxation purposes for the period XXXX to XXXX? | A1: No.

Relevant facts and circumstances: You are an Australian citizen and are married to a XXXX national. Since XXXX, you have worked in XXXX, predominantly for XXXX. While working with XXXX, you lived for many years in various countries around the world. In XXXX you retired from XXXX and became a freelance consultant. Your freelance work with XXXX requires you to carry out activities in XXXX,. Usually this would entail in-country visits as the main activities but during COVID you were only able to work online. In addition to your contract work you also receive a pension from XXXX. You have been a non-resident for Australian tax purposes since leaving the country in XXXX with the exception of two short periods. In XXXX you and your spouse bought a home in XXXX. In XXXX you shipped the bulk of your belongings their and it became your main residence in XXXX. The property is a substantial home sitting on approximately 1 hectare of land. For your family home in XXXX, you employee two on-site personnel (involved in groundskeeping and housekeeping) that live permanently on the property whether you are there or travelling. This is necessary for maintenance and the security of the property. The home remained unoccupied (except for the staff's apartment) when you were not in XXXX. This property is always at your disposal immediately and you have no intention of selling this property. You currently hold a XXXX visa, which enables you to reside in XXXX for a period of up to XXXX You own a single bedroom apartment in the XXXX and a holiday home in XXXX. When not in use, you do not lease out either of these properties. The holiday house is used by your family. You have made no changes to the apartment since you bought it. On XXXX, you and your spouse arrived in Australia with the intention to stay through the Christmas holiday period. You envisaged a return to XXXX after XXXX. At this stage you had not booked a return flight as you were not at the time sure whether you would return directly to XXXX or pass-through XXXX to visit family On XXXX, you left Australia for a business trip to XXXX, arriving back in Australia on XXXX. Once COVID struck Australia in XXXX, you decided not to leave Australia due to the COVID risks of traveling in airports and planes, the COVID situation in XXXX and social unrest in XXXX. When the Australian borders were closed you were under the impression that as a single-nationality Australian, you would not be allowed to travel. As you wanted to be two-dose vaccinated before travelling, you and your spouse remained in Australia during the pandemic, ultimately leaving for XXXX on XXXX. You and your spouse had frequently reviewed the exemptions from travel restrictions, and you concluded that you were not eligible to travel. In XXXX, you became aware that you may be able to leave Australia on the basis that you were normally resident in another country, although this was not definite. As a result of the pandemic, you spent a total of XXXX days in Australia during the XXXX income year and XXXX days in Australia during the XXXX income year. While visiting Australia, you and your spouse predominantly stayed in either your holiday home in XXXX or your apartment in XXXX. As the house is used periodically by your adult children and maintained in a good condition no preparations were needed for your visit. Whilst in Australia, you and your spouse had medical check-ups and received necessary medical treatments. These were covered by a XXXX health insurance policy managed by XXXX. Since XXXX, your principal bank has been XXXX in XXXX, however, you have also maintained a bank account with XXXX in Australia, which you use primarily for property related expenses and living costs when visiting Australia. You have family in Australia, including adult children, grandchildren and a brother, however they are not financial dependants. Your spouse's family reside in XXXX. In addition to the family home in XXXX, you and your spouse also own two apartments in XXXX and are currently constructing another. You and your spouse have established a not-for-profit organization in XXXX, with which you continue to be actively engaged. Whilst within Australia, you remained in contact. Your own role is primarily advisory and continues to be so. Before your visit to Australia your spouse had planned a series of training courses to take place in different parts of XXXX spread over XXXX and XXXX. Normally your spouse would have led these in person but because of COVID restrictions your spouse managed them online from Australia Whilst in Australia you acquired and disposed of shares listed on the Australian Securities Exchange (ASX). Between XXXX and XXXX, you spent approximately a quarter of your time in Australia. However, during this time, only XXXX of these trips to Australia have been for more than XXXX days. You are not a member of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS)

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 subsection 995-1(1)

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 2022/D2 Income tax: residency tests for individuals . We have considered the statutory tests listed above in relation to your situation as follows: | Detailed Reasoning - 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 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. TR 2022/D2 explains that in many cases, a visit to Australia of less than 6 months is not sufficient time to be regarded as residing here. This is because a person does not usually establish a sufficient connection to Australia in this time. Where you visit Australia and stay here longer than initially intended, the facts surrounding the entire stay in Australia must be considered, not merely the original intended length of stay. If you stay in Australia because you cannot or do not depart when you initially planned, you may become a resident if your behaviour is consistent with residing here. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when determining whether you meet the resides test: • You have been a non-resident for Australian tax purposes since leaving the country in XXXX with the exception of two periods (XXXX-XXXX and XXXX-XXXX). • On XXXX, you and your spouse arrived in Australia with the intention to stay through the Christmas holiday period only. • Whilst your intention was never to be in Australia for more than XXXX months, travel restrictions from COVID 19 prevented you from leaving sooner. • In XXXX you and your spouse bought a home in XXXX. In XXXX you shipped the bulk of your belongings their and it became your main residence in XXXX. • Your spouse is a XXXX national and your spouse's family also reside in XXXX. • You currently hold a XXXX Visa, which enables you to reside in XXXX for a period of up to XXXX years (and is renewable) • In addition to the family home in XXXX, you and your spouse also own two apartments in XXXX and are currently constructing another. • You and your spouse have established a not-for-profit organization in XXXX, with which you continue to be actively engaged. In your case, although you ended up staying in Australia for just over XX months, it is accepted that you stayed here for longer than you intended because you were unable to leave because of factors outside your control. Consequently, it is accepted that you are not a resident of Australia under the resides test for the period XXXX to XXXX. 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). | Detailed Reasoning - 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. | Detailed Reasoning - 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. | Detailed Reasoning - 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 XXXX. You were not entitled to reside in XXXX indefinitely. You currently hold a XXXX visa, which enables you to reside in XXXX for a period of up to XXXX years. Therefore, your domicile is Australia. | Detailed Reasoning - 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: (a) the intended and actual length of the taxpayer's stay in the overseas country; (b) 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; (c) 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; (d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; (e) the duration and continuity of the taxpayer's presence in the overseas country; and (f) 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia: • You have been a non-resident for Australian tax purposes since leaving the country in XXXX with the exception of two periods (XXXX-XXXX and XXXX-XXXX). • On XXXX, you and your spouse arrived in Australia with the intention to stay through the Christmas holiday period only. • Whilst your intention was never to be in Australia for more than XXXX months, travel restrictions from COVID 19 prevented you from leaving sooner. • In XXXX you and your spouse bought a home in XXXX. In XXXX you shipped the bulk of your belongings their and it became your main residence in XXXX. • Your spouse is a XXXX national and your spouse's family also reside in XXXX. • You currently hold a XXXX visa, which enables you to reside in XXXX for a period of up to XXXX years (and is renewable) • In addition to the family home in XXXX, you and your spouse also own two apartments in XXXX and are currently constructing another. • You and your spouse have established a not-for-profit organization in XXXX, with which you continue to be actively engaged. In your case, although you ended up staying in Australia for just over 18 months, it is accepted that you stayed here for longer than you intended because you were unable to leave because of factors outside your control. Consequently, the Commissioner is satisfied that your permanent place of abode is outside Australia. Therefore, you are not a resident of Australia under the domicile test. | Detailed Reasoning - 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. | Detailed Reasoning - Application to your situation: You have been in Australia for 183 days or more in the 20XX and 20XX income years. 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. | Detailed Reasoning - 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when deciding whether your usual place of abode is outside of Australia: • You have been a non-resident for Australian tax purposes since leaving the country in XXXX with the exception of two periods (XXXX-XXXX and XXXX-XXXX). • On XXXX, you and your spouse arrived in Australia with the intention to stay through the Christmas holiday period only. • Whilst your intention was never to be in Australia for more than XXXX months, travel restrictions from COVID 19 prevented you from leaving sooner. • In XXXX you and your spouse bought a home in XXXX. In XXXX you shipped the bulk of your belongings their and it became your main residence in XXXX. • Your spouse is a XXXX national and your spouse's family also reside in XXXX. • You currently hold a XXXX visa, which enables you to reside in XXXX for a period of up to XXXX years (and is renewable) • In addition to the family home in XXXX, you and your spouse also own two apartments in XXXX and are currently constructing another. • You and your spouse have established a not-for-profit organization in XXXX, with which you continue to be actively engaged. Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income years. | Detailed Reasoning - 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when deciding whether you intend to take up residence in Australia: • On XXXX, you and your spouse arrived in Australia with the intention to stay through the Christmas holiday period only. • Whilst your intention was never to be in Australia for more than XXXX months, travel restrictions from COVID 19 prevented you from leaving sooner. Based on your circumstances, the Commissioner is satisfied that you did not intend to take up residence in Australia for the relevant income years. | Detailed Reasoning - 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. | Detailed Reasoning - 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 of Australia under this test. | Detailed Reasoning - Conclusion: As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes from XXXX to XXXX.