Private ruling: Residency
Date of advice: 7 February 2022
Published: May 2022
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you a resident of Australia for taxation purposes after departing Australia to live and work in Country B? | A1: No. This private ruling applies for the following period: Financial year ended 30 June 20YY

Relevant facts and circumstances: You were born in Country A. You are a citizen of both Country A and Australia, however you have not lived in Country A for many years. You have most recently resided in Australia. Between late 20YY and late 20YY you lived in Australia but worked as a fly-in/fly-out worker each month in Country B. Your expenses were paid for by your employer at the time. During this period you were a resident of Australia for taxation purposes. Between late 20YY and late 20YY you had a contract to work in Country B and Australia. You were in Country B between late 20YY and early 20YY and late 20YY to early 20YY. You returned to Australia and continued working remotely due to Covid19 restrictions. You remained a resident of Australia for taxation purposes for the 20YY to 20YY financial years. You have been offered work with a non-profit organisation on an ongoing full-time employment contract in Country B. The position is located in the organisation's Country B office. Your employer will sponsor a long-term (several year) working visa to facilitate working in Country B. Your employment contract is expected to continue until at least 20YY with a strong likelihood of extension beyond that. Your employer will not provide accommodation for you in Country B; you will sign a lease on a residence when you are living and working there. You intend to leave Australia and establish residency overseas; you will live and work in Country B for an indefinite period of time. You will not be accompanied by your family when you move to Country B. You will not maintain a home in Australia. You will take necessary possessions with you when you move; non-essential possessions will remain in a storage facility in Australia. You intend to establish a life in Country B where you will be permanently employed. You have no intention to return to live in Australia or elsewhere. You do not have a job being held for you in Australia. You do not have any assets in Australia but will maintain bank accounts. You intend to visit your family in Australia and expect to stay up to a few weeks per year in Australia during these visits, subject to leave availability and border restrictions. These may be taken as annual or multiple visits. Whilst you assist your family with mortgage payments on a house in Australia that they own, you are not a part-owner nor do you own any other property in Australia. When you return to Australia to visit your family, providing they still reside at the same house, you can stay there if practicable. However, you do not have any right of access to the property and would arrange alternative accommodation if necessary. You are not a contributing member of 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. You will have your name removed from the Australian Electoral Roll after relocating to Papua New Guinea.

Relevant legislative provisions: Income tax Assessment Act 1997 (ITAA 1997) | Income Tax Assessment Act 1936 (ITAA 1936 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, | • the domicile test, | • the 183 day test, and | • the superannuation test. | The primary test for deciding the residency status of an individual is whether they reside 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 resides test | The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. These definitions have been highlighted in cases as being definitive observations of the meaning of resides (see Viscount LC in Levene v Commissioners of Inland Revenue [1928] AC 217 and Logan J in Stockton v Federal Commissioner of Taxation [2019] FCA 1679). | 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 217at 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. | Case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: | • Physical presence | • Intention or purpose of presence | • Family and business/employment ties | • Maintenance and location of assets, and | • Social and living arrangements | These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia. | It is important to note that not one single factor is decisive, and the weight given to each factor depends on each individual's circumstances. | We consider that your circumstances are not consistent with residing in Australia. This is because: | You have been offered work with a non-profit organisation on an ongoing full-time employment contract in Country B. The position is located in the organisation's Country B office. | Your employer will sponsor a long-term (multi-year) working visa to facilitate working in Country B. | Your employment contract is expected to continue until at least 20YY with a strong likelihood of extension beyond that. | You will arrange your own accommodation and sign a lease on a residence. | You intend to leave Australia and establish residency overseas; you will live and work in Country B for an indefinite period of time. | You will take necessary possessions with you when you move; non-essential possessions will remain in a storage facility in Australia. | You do not have a job being held for you in Australia and will not maintain any assets in Australia. | You intend to have your name removed from the Australian Electoral Roll once you relocate to Country B. | You are not a resident of Australia under the resides 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 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 acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and you must 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 relocated to Australia in 20YY, subsequently becoming an Australian citizen. Therefore, you acquired a domicile of choice in Australia. | It is considered that you have not abandoned your domicile of choice in Australia as there is insufficient evidence to say that you have obtained a domicile of choice in Country B. | 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 courts have held that the phrase 'permanent place of abode' calls for a consideration of the town or country where a person is located. 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 his or her permanent place of abode outside Australia are: | (a) whether the taxpayer has definitely abandoned, in a permanent way, living in Australia; and | (b) whether the taxpayer is living permanently in a specific country. | Paragraph 23 of Taxation Ruling IT 2650 Residency - Permanent place of abode outside Australia sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode: | (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. | The Commissioner is satisfied that your permanent place of abode is outside Australia. This takes into account that: | Your intention is to make your home indefinitely outside Australia in Country B once you relocate to Country B where you will be employed on ongoing full-time basis. | Your employer is going to sponsor your Visa application and you will lease a property to live in as your home, taking your necessary possessions with you. | You do not own a property in Australia and will not maintain one for your use. | You have no current intention to return to live in Australia or elsewhere and you will overall have greater economic and personal ties to Country B than with Australia. | You intend to have your name removed from the Australian Electoral Roll once you relocate to Country B. | Therefore, you are not a resident of Australia under this test. | 183-day test | Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. | You have been present in Australia for 183 days or more during the 20YY income year. However, your intention is to permanently depart Australia in early 20YY. Once you depart permanently, your usual abode will be in Country B. As such, you will not be a resident under this test once you have left Australia. | 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 contributing member of 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 | 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 financial year ended 30 June 20YY.