Private ruling: Residency - assessable income
Date of advice: 8 December 2025
Published: 27 January 2026
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: Are you a resident of Australia for taxation purposes pursuant to section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the relevant period? | A1: Yes. | Q2: Are you a resident of Australia for taxation purposes according to the tie breaker provisions of Article X of the double tax agreement (DTA) between Australia and Country A for the relevant period? | A2: No. | Q3: Is your business income received from Australian clients assessable under section 6-5 of the Income tax Assessment Act 1997 (ITAA 1997) for the relevant period? | A3: No.

Relevant facts and circumstances: 1. In your income tax return for the specified year, you self-assessed as a non-resident of Australia resident for tax purposes. 2. Country A considers you to be a Country A resident for tax purposes. Travel outside of Australia 3. You and your spouse (Person A) departed Australia for approximately 17 months. You provided us with details on your travel dates. 4. You were in Country A for approximately 13 months. 5. You spent approximately 2 months in Country B before and after your time in Country A. Intention prior to and after leaving Australia 6. You provided us with details of your intention prior to leaving Australia. 7. You provided us on details about your change of intention when you arrived in Country B, which led to you going to Country A. 8. You left Country B to go to Country A after 2 months. 9. Your lease for the property was for one year. 10. As your lease was for one year, you made the decision to stay in Country A. Residing in Country A 11. You entered Country A on a tourist visa. 12. Whilst living in Country A, you applied for a permanent visa to allow you to stay in Country B. You advised us of the date that you were granted your permanent visa, which was while you were still in Country A. 13. When you were not leasing an apartment, you stayed with Person A's parents located in Country A. 14. You and Person A did not have any employment income in Country A during the specified income year. 15. Person A's immediate and extended family reside in Country A. Ties to Australia 16. You maintained your private health insurance and Medicare whilst out of Australia. 17. You provided details on why you maintained your private health insurance while outside of Australia. 18. Neither you or Person A are members of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS). 19. You notified your bank that you would be out of Australia. 20. You switched to digital communication for all other Australian organisations that you deal with. 21. During your time in the Person A your parents, siblings, their spouses, your nieces and nephews were all in Australia. 22. You and Person A own a property in Australia which you leased whilst you were out of Australia. 23. The tenants of your property were found on Facebook and were a childhood acquaintance (a friend of your extended family). 24. You entered into a one year lease with the tenants from a specified date, with an option to extend. On the expiry of the one year lease, the lease was renewed on a flexible/monthly basis, with you moving back into the property on your return to Australia. 25. You provided us with details on what you did with your possessions prior to leaving Australia. 26. You did not have any employment income during the specified income year. 27. You received a salary from Entity D which was in relation to your volunteer work in Country B. Business Income 28. You are a professional writer who writes books and articles for not-for-profit organisations in Australia and overseas. 29. You provided us on details about your business activities whilst out of Australia. 30. You provided us with details on the country your clients were based and location of the bank account where you received the income.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 995-1 | International Tax Agreements Act 1953

Reasons for decision: Detailed Reasoning - Detailed reasoning: 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 purpose 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 4 tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are: • the resides test (also referred to as the ordinary concepts test) • the domicile test • the 183-day test, and • the Commonwealth superannuation fund test. It is sufficient for you to be a resident under one of these tests to be a resident for tax purposes. Our interpretation of the law in respect of the residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals (TR 2023/1). | 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 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 a 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 case 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 the place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235 ... 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 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 resides test is about whether an individual resides in Australia, the factor's 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. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia. | 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 of 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 - 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 of 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 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 paragraph 36 and 40 that key considerations in determining whether a taxpayer has their permanent place of abode outside Australia are: • 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 Commissioner considers the following facts relevant to whether the taxpayer's permanent place of abode is outside of Australia: • the intended and actual length of the taxpayer's stay in the overseas country. • 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. • whether the taxpayer has established a home (in the sense of a dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia. • whether any residence or place of abode exists in Australia or has been abandoned because of overseas absence. • the duration and continuity of the taxpayer's presence in the overseas country. • 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 the family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. In TR 2023/1, the Commissioner considers that the following are relevant factors as to whether an individual's permanent place of abode is overseas: • nature of accommodation, and • length of overseas stay • durability of association. 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. TR 2023/1 provides guidance in relation to the length of stay overseas at paragraphs 73-75 states that if: 73. The longer you stay in any one particular place, the more permanent it is likely to be. This is because of the practical reality that extended periods will usually and naturally lead to the formation of durable connections overseas and loosening of connections with Australia. 74. Generally, a departure from Australia with an intention to return to Australia after a finite period would not result in you having your permanent place of abode overseas. This is consistent with the legislative intent of the definition. However, if some time through the period overseas your intentions changed, all the factors would need to be reconsidered at that point to determine whether your permanent place of abode is overseas. 75. Similarly, if you take up an employment opportunity overseas or commence living overseas with no fixed timeframe in mind but as a tentative venture, you are unlikely to have your permanent place of abode overseas. This is because you are likely to retain Australia as your home, for a time at least, maintaining connections that are not consistent with an abandonment of Australia as your place of residency. Again, as intentions and situations evolve, the circumstances may later point to you having your permanent place of abode overseas. TR 2023/1 provides an example where a taxpayer who was out of Australia for 2 years was an Australian resident due to their domicile being in Australia and that their permanent place of abode was not outside of Australia: | Detailed Reasoning - Example 7 - person out of Australia for 2 years - resident under ordinary concepts and domicile tests: 131. Mark, an Australian-resident employee of a mining company, is transferred overseas to Brazil for a temporary work assignment for a period of 2 years. He intends to return to Australia at the end of that period. The purpose of the assignment is for Mark to gain wider work experience. Mark is initially accompanied by his wife and children to enable them to experience the sights and culture of Brazil. However, as originally intended, his wife and children return to the family home in Australia so the children can continue their schooling. Mark spends as much time in Australia as his leave arrangements permit with his family and friends. He also returns for short periods to celebrate family birthdays and other milestone events. While in Brazil, he stays in a serviced apartment provided by his employer, maintains bank accounts in Australia and continues to contribute to his Australian superannuation. He makes no investments in the overseas country and remits all money in excess of living requirements to Australia for his family to use or for investment. 132. Mark is considered to be a resident of Australia under the ordinary concepts test as he has maintained a connection with Australia consistent with residing here, albeit being absent for a substantial period. 133. Mark is also considered to be a resident under the domicile test because he has a domicile in Australia and his permanent place of abode is not outside Australia. Mark has not abandoned his residence in Australia given his continued presence to maintain his family life, his assets remaining in Australia and the finite period of his overseas assignment. His ties with Brazil are limited to his employment and his way of life reflects this. TR 2023/1 provides an example where a taxpayer who was out of Australia for 2 years was not an Australian resident: | Detailed Reasoning - Example 8 - person out of Australia for 2 years - non-resident: 134. Matthew, an Australian-resident employee of the same mining company as Mark, is also transferred to Brazil in January for a temporary work assignment for a period of 2 years, intending to return to Australia at the end. He is not accompanied by his wife as they have been having marriage difficulties and they have decided to spend some time apart. One month after Matthew's departure, the marriage breaks down. Matthew is attracted to the culture and lifestyle of Brazil and decides to start a new life there, with no immediate plans to return to Australia to live. He starts exploring opportunities to gain a permanent position in Brazil and, in July, obtains a promotion to a permanent role in Rio de Janeiro. The role requires some regional travel but he spends the majority of his time at the office in Rio de Janeiro. In July, he also sells his car in Australia and starts the process of selling the family home in Australia that he owned with his wife. This takes 12 months to resolve. He remains in employer-provided accommodation until his Australian home sells and then uses his proceeds to purchase an apartment in Brazil, which he lives in. Matthew joins a Latin dance class in the evenings. He returns to Australia twice in 2 years - the first time is 3 months after his initial departure to collect his belongings after the separation from his wife. He takes most of these with him to Brazil but leaves a few keepsakes at his parents' house. The second time, he returns for his father's funeral, 2 years after his initial departure. His father leaves behind a family business and Matthew stays in a hotel in Australia while deciding what to do with the business. He works for his Brazilian employer remotely from the hotel. After a month in Australia, Matthew decides to resign from his job in Brazil and stay permanently in Australia to run the business. 135. Matthew ceased to be a resident of Australia according to ordinary concepts once his intention regarding returning to Australia changed and his connections to Australia were severed. He then resumed Australian residency a month after his return to Australia following his father's death. 136. Matthew has an Australian domicile. Once his intentions changed and he purchased an apartment in Rio de Janeiro, he had definitely abandoned residency in Australia and commenced living in Brazil in a permanent way. He was therefore a non-resident under the domicile test from July until a month after his return to Australia following his father's death. | 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: • the person's usual place of abode is outside Australia, and • the person does not intend to take up residence in Australia. The question of usual place of abode is a question of fact and generally means the abode customarily or commonly used by you when you are physically in a country. | Detailed Reasoning - Superannuation test: An individual is a resident of Australia if they are either a member of the superannuation scheme established by the deed under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976 , or they are the spouse, of the child under 16 of such a person. | Detailed Reasoning - Application to your circumstances: We have considered each of the statutory tests listed above in relation to your particular facts and circumstances. We conclude that, for the period you were in Country A you are a resident of Australia as follows. Taking into account your individual circumstances, we have concluded that you are a resident of Australia according to ordinary concepts and your domicile is Australia. You were not present in Australia for 183 days or more during the specified income year. You returned to Australia early during the next income year. You entered Country A on a tourist visa. You applied and were granted your permanent visa whilst in Country B. We consider the following factors in forming our conclusion: • You left Australia to complete volunteer work in Country B. Your time outside of Australia was only extended due to personal circumstances in Country A. • Your house in Australia was rented while you were out of Australia. • You kept your sentimental items in a locked room in your rented house in Australia • All of your family (with the exception of Person A and your in-law's) are in Australia. • You leased an apartment in Country A for one year. • You returned to Australia on a specified date. You do not fulfil the requirements of the Commonwealth Superannuation test and are therefore not a resident. You will be a resident of Australia for taxation purposes for the relevant period. Whilst under Australian law, you are an Australian resident for taxation purposes, you advised that Country A, also considers you to be a resident for taxation purposes. The impact of this will be considered at question 2. | Detailed Reasoning - Question 2: Are you a resident of Australia for taxation purposes according to the tie breaker provisions of Article X of the double tax agreement (DTA) between Australia and Country A for the relevant period? | Detailed Reasoning - Double Taxation Agreement: It is possible to be a resident for tax purposes of more than one country at the same time in respect of an income year or part of an income year. If this is the case, in determining your liability to pay tax in Australia it is necessary to consider any applicable double tax agreements. Sections 4 and 5 of the International Tax Agreements Act 1953 (Agreements Act) incorporate that Act with the ITAA 1936 and the ITAA 1997 and provide that the provisions of a double tax agreement have the force of law. You have advised that you were a tax resident of Country A for the income year ended 30 June 20XX. Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements (TR 2001/13) discusses the Commissioner's views about interpreting double tax agreements. Paragraph 104 provides that the OECD Model Tax Convention and Commentary will often need to be considered in interpreting double tax agreements. Article X of the Country A sets out the tiebreaker rules for residency for individuals. The tiebreaker rules ensure that the individual is only treated as a resident of one country for the purposes of working out liability to tax on their income under the double tax agreement. The tiebreaker rules do not change a taxpayer's residency status for domestic law purposes. | Detailed Reasoning - Permanent home: Permanent home is not defined in the Double Tax Agreement. Therefore, recourse can be made to supplementary materials in order to aid construction. The OECD commentary to the Model Tax Convention provides that in relation to a 'permanent home': a. for a home to be permanent, an individual must have arranged and retained it for his or her permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration. The dwelling has to be available at all times continuously and not occasionally for the purposes of a stay, which owing to the reasons for it is necessarily of short duration (e.g. travel for pleasure, business travel, attending a course etc) For instance, a house owned by an individual cannot be considered to be available to that individual during a period when the house has been rented out and effectively handed over to an unrelated party so that the individual no longer has possession of the house and the possibility to stay there. b. any form of home may be taken into account, including a house or apartment belonging to or rented by the individual and a rented furnished room. | Detailed Reasoning - Application to your circumstances: From a specified date, your living arrangements in Country A and Australia were as follows: | Detailed Reasoning - Country A: You had a home that you were renting with Person A and child available to you until the lease concluded on a specified date. After this date you lived with Person A's parents until you left Country A. Therefore, you had a permanent home in Country A for the specified period. | Detailed Reasoning - Australia: You owned your home in Australia that was leased to a childhood acquaintance under a lease agreement; therefore, it was not available for your own personal use. You moved back into your home on your return to Australia. Therefore, you did not have a permanent home in Australia for the specified period. | Detailed Reasoning - Conclusion: We have concluded that the tiebreaker tests in Article X of the Country A Agreement so that you are deemed to be a resident only of Country A for treaty purposes. The provisions of Country A Agreement will therefore apply on the basis that you are a resident of Country A for tax purpose and not of Australia. | Detailed Reasoning - Question 3: Is your business income received from Australian clients assessable under section 6-5 of the Income tax Assessment Act 1997 (ITAA 1997)? | Detailed Reasoning - Assessable income: The rules for when income is assessable based on your residency status are set out under section 6-5 of the ITAA 1997. For Australian residents, your assessable income includes income from all sources, whether in or out of Australia. For non-residents, your assessable income includes only income derived from an Australian source. As explained above you are a non-resident of Australia. | Detailed Reasoning - Source of income: If you are a non-resident, your assessable income includes only income derived from an Australian source under section 6-5 of the ITAA 1997. There is no specific definition of the term 'source' in the ITAA 1997 or the ITAA1936. The application of the term 'source' has been addressed by several court cases. The courts have held that determining the source of an item of income is a matter of the facts and circumstances of each case. Isaacs J stated in Nathan v Federal Commissioner of Taxation [1918] 25 CLR 183 at 189: The Legislature in using the word 'source' meant, not a legal concept, but something which a practical man would regard as a real source of income... the ascertainment of the actual source of a given income is a practical, hard matter of fact. Bowen J in Federal Commissioner of Taxation v Efstathakis (1979) 9 ATR 867 ( Efstathakis ) stated to determine source, weight must be given to various factors based on their relative importance. There have been numerous court cases that have considered the question of source of income. Matters the courts have considered include the place where a contract is entered into, the place where a contract is negotiated, the place of payment, the place where a service is performed and the place where business operations are carried on. The weighting given to each is determined by their relevance to the individual circumstances of the taxpayer. | Detailed Reasoning - Operation of Country A Agreement: In determining tax liability on Australian sourced income, it is necessary to consider not only the income tax laws but also any applicable tax treaty with Country A. The Country A Agreement operates to avoid the double taxation of income received by Australian and Country A residents. Under Article X of Country A Agreement, the business profits of an enterprise of Country A are taxable in Country A unless the enterprise carries on business in Australia through a 'permanent establishment' situated in Australia. | Detailed Reasoning - Permanent establishment: Article X of Country A Agreement states that the term 'permanent establishment' means a fixed place of business through which the business of the enterprise is wholly or partly carried on. A 'permanent establishment' includes: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) an agricultural, pastoral or forestry property; (h) a building site or construction, assembly or installation project which exists for more than 9 months; and (i) an installation, drilling rig or ship that, for an aggregate period of at least 6 months in any 24 month period, is used by an enterprise of one of the Contracting States in the other Contracting State for dredging or for or in connection with the exploration or exploration of natural resources of the sea-bed and subsoil. Commentaries on the OECD Model Tax Convention on Income and Capital released in 2017 (OECD Commentary) provides guidance on determining permanent establishments. Paragraph 6 of the OECD Commentary provides that the definition of 'permanent establishment' contains the following conditions: • the existence of a 'place of business', • this place of business is 'fixed', i.e., it must be established at a distinct place with a certain degree of permanence, and • the carrying on of the business of the enterprise through this fixed place of business. The OECD Commentary provides guidance on how these conditions can be satisfied as follows: • the term 'place of business' covers any premises and may exist where 'it simply has a certain amount of space at its disposal' (paragraph 10), • the mere fact that an enterprise has a certain amount of space at its disposal which is used for business activities is sufficient to constitute a place of business. No formal legal rights to use that place is required (paragraph 11), and • where an enterprise has an exclusive legal right to use a particular location which is used only for carrying on that enterprise's own business activities (e.g. where it has legal possession of that location), that location is clearly at the disposal of the enterprise (paragraph 12). | Detailed Reasoning - Application to your circumstances: Place where the business contract is entered into In your situation, you operated a business which was established while you were a resident of Australia and registered under an ABN. During the relevant income year you carried out the services remotely from Country A. Accordingly, any contracts for services are formulated, prepared and governed by the laws that apply in Australia. Therefore, this factor significantly leans towards the source of the income being Australia. While you were located in Country A after you commenced your business, this does not change this outcome. Place where remuneration is paid You have 2 Australian based clients with one paying you into Country A's bank account and the other paying you into your Australian bank account. Therefore, the factor does not indicate a clear source of income. Place where services are performed In the Cam & Sons Ltd , French and Efstathakis cases, it was held that the source of the income was where the taxpayer performed the services. In those cases, the place where the taxpayer was located was the same as where the taxpayer did the work, where it was given effect to, and where the outcome of the work occurred. Your circumstances differ from these cases as the place where you did the work was Country A but the place where your work was given effect to and where the outcome of the work occurred was Australia. Looking at the physical location of where your duties were performed alone, this means that the source of the work is Country A. Your physical location is not sufficient, and the other factors listed above are also relevant. The third factor leans towards the income being sourced in Australia especially considering that you would be able to physically perform your work in any location in the world. Your business duties had no relationship with Country A apart from your physical presence. The income you earned from your Australian business is therefore sourced in Australia. Permanent establishment You operated your business from your home in Country A. You did not have any premises located in Australia used for your business purposes. There is no existence of a fixed place of business in Australia which you use to carrying on your business through, when you were residing in Country A. Your business therefore does not have a permanent establishment in Australia under Article X of the Country A Agreement. Article X of Country A Agreement applies, and the profits from your business will not be taxable in Australia.

Question 1: Are you a resident of Australia for taxation purposes pursuant to section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the period 15 June 2023 to 29 July 2024?