Private ruling: Residency
Date of advice: 6 June 2022
Published: August 2022
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 Country Z. You are a citizen of Country Z. You are a permanent resident of Australia, this was granted several years ago. Your domicile of choice is Australia. You have been living and studying and working in Australia for more than a decade. You left Australia a couple of years ago to go back to Country Z for medical treatment. You required an organ transplant which your family were the best suited donors. You needed to be near family during this process so they could support you while you were so ill. Subsequent to the organ transplant you were required to have continual medical appointments/procedures. You needed to be in Country Z for pre transplant treatment and testing. The surgery was planned for the following year and this was delayed due to covid. Later in the year you suffered further medical issues. You were in hospital for several months. In the following year you were able to be put back on the donor waiting list. In the year after you underwent the transplant surgery. You intend health permitting to return to Australia in a few months. The pandemic meant you were in Country Z longer than you would of if there was no pandemic. You and your former spouse purchased a house in Australia which was sold in a previous year. You and your former spouse separated in the year prior to the sale of the property. Your partner lived in the house initially and then it was rented out prior to the decision to sell it. You intend on purchasing another house in Australia when you return. You worked in Australia prior to leaving for Country Z. Your social ties remain in Australia including being a member of various advocacy groups, alliances and associations, and a political party. You have significant professional ties in Australia. In addition to the substantial medical qualifications gained in Australia you have appropriate registration (and do not intend to apply or hold equivalent registration in Country Z). You are engaged and be involved in training in Australia to keep updated your medical knowledge and to meet continuing professional education requirements. You stayed with your parents in Country Z throughout your treatment and transplant. You did not work in Country Z. You do not have a legal interest in your parents' home. You did not pay rent to your parents. You did not have a car in Country Z. Your assets in Australia consist of bank accounts and super funds. You have some items in a storage facility in Australia. You have a number of job offers in Australia when you return. You are not eligible to contribute to the PSS or the CSS super funds.

Relevant legislative provisions: Income Tax Assessment Act 1936 | Income Tax Assessment Act 1997 section 995-1

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, • the domicile test, • the 183-day test, and • the superannuation tests. 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. | 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. We consider that your circumstances are consistent with you not residing in Australia according to ordinary concepts. This is evident from the following: • You have been living and working in Australia for a number of years. • You needed to return to Country Z to have an organ transplant. • You were working in Australia prior to leaving. • Covid meant that you were in Country Z longer than planned due to the surgery being delayed and complications with your health. • It was your intention when you left Australia to return once your treatment was complete. • You intend on returning health permitting to Australia in a few months. • You have a number of job offers in Australia to take up when you return. • You have maintained your social and professional associations in Australia. • You have your personal belongings in a storage facility in Australia. You are a resident under this test. | 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. In your case, your domicile of choice 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 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 you do not have a permanent place of abode outside Australia. This takes into account that: • When you left Australia it was your intention to return soon after • You only went to Country Z for health reasons • The pandemic delayed your transplant • You stayed with your parents in Country Z • You have job offers waiting for you in Australia which you intend on accepting. You are a resident under this test. | Detailed Reasoning - 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 were not in Australia for more than 183 days during the relevant income years. You are not a resident under this 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. You and your spouse 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 are not a resident under this test. | Detailed Reasoning - Conclusion: You are a resident of Australia for taxation purposes.