Private ruling: Residency for tax purposes
Date of advice: 7 January 2021
Published: March 2021
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: Were you a resident of Australia for tax purposes? | A1: No

Relevant facts and circumstances: You were born in Country X and have lived and worked in Country X for many years. One of your children migrated to Australia over XX years ago. You were granted a visa which enabled you to visit Australia. You and your spouse travelled to Australia to visit your child and grandchild on several occasions each year during the relevant income years. Your visits were as follows: • Year 1 - 3 times for a total of less than 183 days • Year 2 - 3 times for a total of less than 183 days • Year 3 - 4 times for a total of more than 183 days. Your child accommodated you and your spouse in their own house for the duration of your stays and paid for your living costs in Australia. You were not intending to settle in Australia permanently during that period. Another child of yours also lives in Australia. Apart from the two children in Australia, most of your immediate family, extended family and friends reside in Country X During the relevant income years, you were still working in your business in Country X. The business was your main source of income. You and your spouse maintained a family home and investment properties in Country X during the relevant income years. You did not purchase or rent any real estate in Australia during that time. You maintained various bank accounts in both Country X and Australia during the relevant period. The funds in Australia were held in term deposit accounts for investment purposes while the bank accounts in Country X continued to be used for all business and personal related transactions. There was no regular transfer of funds from Country X to Australia during the relevant period. You maintained two motor vehicles in Country X during the relevant period. You did not own a motor vehicle in Australia. You filed your income tax returns in Country X as a resident for tax purposes during the relevant income years.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision: Summary: The terms 'resident' and 'resident of Australia' are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: • the resides test, • the domicile test, • the 183 day test, and • the superannuation test. | Detailed Reasoning - The resides test: The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. In your case, you had a general routine of travelling between Country X and Australia several times each year during the relevant period and it is accepted that the time you spent in Australia was as a visitor, not a resident. Therefore, you did not reside in Australia during the relevant income years and were not a resident of Australia under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. In your case, it is accepted that you did not change your Country X domicile to Australia. Therefore, you were not a resident of Australia under this test during the relevant income years. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for 183 days or more in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You were not a resident under this test for the first two income years as you were not present in Australia for more than 183 days. You were also not a resident for the third income year as although you were present in Australia for 183 days or more, the Commissioner is satisfied that your usual place of abode was outside of Australia and you had no intention of taking up residence here. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You were not a resident under this test.