Private ruling: Residency
Date of advice: 23 March 2023
Published: 15 May 2023
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: Yes.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia and Country X. You are not a permanent resident of any other country. You left Australia on XX XXX 20XX to go to Country Z where you were working for an international organisation. You were required to return to Australia on XX XXX 20XX for medical reasons. You remained in Australia on medical leave for several months with the intention of returning to Country Z. You were not able to return overseas. You were not sent elsewhere to work. You are still being paid by the overseas organisation. You did not pay tax in overseas. You lived in employer provided accommodation in Country Z. The accommodation was shared with other workers. Your employer initially applied for a 1-month multi entry visa for you to enter Country Z and then obtained a 12-month multi entry visa for you. The visa only allowed you to be in Country Z while employed. When you left country Z, you did not take your belongings with you. Your belongings were packed up by a colleague and sent to the capital of Country Z. Your belongings are still in Country Z. You are not able to hold any other employment while you have a contract with the overseas organisation. Prior to going to country Z, you worked for an Australian organisation. You lived in a share house in Australia prior to going to Country Z. You are currently living with your parents in Australia. You do not have any assets in country Z. You have a pension account in Country Y. You have a bank account, super fund, and exchange trader funds in Australia. You are single. You are not eligible to contribute to the PSS or the CSS super funds.

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

Reasons for decision: Summary: 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 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 Draft 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: 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when determining whether you meet the resides test: You left Australia on XX XXX 20XX to go overseas to work. You were in Country Z for 5 months when you had to return to Australia on medical grounds. You lived in employer provided accommodation in Country Z which was shared. You are currently in Australia living with your parents and you have not been relocated to another country with your employer. For the period you were in Country Z between XX XXX and XX XXX 20XX you were a resident of Australia for taxation purposes under the resides test. Whilst it is not necessary to consider the remaining three tests as you are a resident under the resides test, the Commissioner will consider them for completeness. | 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: You were born in Australia, and you are a citizen of Australia. Your domicile of origin is Australia. You are also a resident of Australia under the domicile test. | 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: 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 were in Country Z for 5 months • You returned to Australia a medical condition • You lived in employer provided accommodation in Country Z which was shared • Your visa only allowed you to be in Country Z for 12 months • Your visa did not allow you to remain permanently in Country Z • The visa was only valid for the period you were employed. The Commissioner is satisfied that you did not have a permanent place of abode outside Australia for the period XX XXX 20XX to XX XXX 20XX. Therefore, you were a resident of Australia for taxation purposes under this permanent place of abode 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: | Detailed Reasoning - Application to your situation: You were in Australia for more than 183 days in the 20XX and 20XX-income years. You intended on being resident in Australia during this period and you did not have a usual place of abode outside Australia. You are therefore a resident of Australia under the 183-day test. | 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 under this test. | Detailed Reasoning - Conclusion: You are a resident of Australia for income tax purposes for the relevant income years.

the resides test (also referred to as the ordinary concepts test) | the Commonwealth superannuation fund 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. | 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 person's usual place of abode is outside Australia, and | the person does not intend to take up residence in Australia.