Private ruling: Residency for tax purposes
Date of advice: 18 May 2021
Published: July 2021
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for tax purposes? | A1: No.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You left Australia several years ago to live and work in Country X for the foreseeable future. Your spouse accompanied you to Country X. Your employment contract is for a period of X years and can be extended subject to your performance. You have an employment and residence visa for Country X which is valid for several years and is renewable. The visa is linked to your employment. You intend to work in Country X for a number of years until your retirement. You intend to retire to Country Y. In the 20XX income year, you returned to Australia several times for work purposes for short periods. In the 20XY income year, you returned to Australia for work purposes once for X days. Going forward, you may return to Australia twice a year. You live in an apartment you have leased in Country X and have furnished it at your own expense. You purchased a motor vehicle in Country X. You are a member of a health club in Country X and also a member of two business groups. You have developed a network of friends in Country X. You have adult children in Australia who are living in your former residence. You intend to rent out or sell the house as soon as practicable. You left your household effects in the house and your children will take them when they eventually move out. You have an investment property and two bank accounts in Australia. You have advised the Australian Electoral Office to have your name removed from the electoral roll. You have advised Medicare that you were departing Australia. Neither you nor your spouse have ever been a member of the Commonwealth Superannuation Scheme or the Public Sector Superannuation Scheme.

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

Reasons for decision: Summary: The terms 'resident' and 'resident of Australia', in regard to an individual, 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. Only one of the tests needs to be met for an individual to be a resident of Australia for tax purposes. | 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. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 5 th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'. In your case, it is accepted that you are not residing in Australia because: • you have been living and working in a foreign country for several years and intend to continue this arrangement for the foreseeable future • you have an employment contract for a period of X years • you live in leased accommodation with your spouse in the foreign country • you have made infrequent return visits to Australia since your departure • you do not intend on returning to Australia to live and will live in another country after you retire. Therefore, you are not a resident of Australia under the resides 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. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of becoming a permanent resident or a citizen of the other country. In your case, you are living and working in a foreign country only up until your retirement and have not become a permanent resident or citizen of that country. Therefore, your domicile is still Australia. | Detailed Reasoning - Permanent place of abode: A person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. 'Permanent' does not mean everlasting or forever but it is to be distinguished from temporary or transitory. In FC of T v Applegate (79 ATC 4307; (1979) 9 ATR 899), Fisher J described 'permanent place of abode' as being: .....the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place. In your case, as mentioned above: • you have been living and working in a foreign country for several years and intend to continue this arrangement for the foreseeable future • you have an employment contract for a period of X years • you live in leased accommodation with your spouse in the foreign country • you have made infrequent return visits to Australia since your departure • you do not intend on returning to Australia to live and will live in another country after you retire. From the above, the Commissioner is satisfied that you have a permanent place of abode outside of Australia. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The 183 day test: Under this test, a person is a resident of Australia if they are physically present in Australia for over half 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 are not a resident under this test as you have not been, and will not be, present in Australia for over half an income year during the relevant income years. | 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 are not a resident under this test. | Detailed Reasoning - Conclusion: As you do not meet any of the residency tests, you are not a resident of Australia for taxation purposes.