Private ruling: Residency
Date of advice: 29 October 2021
Published: January 2022
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

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

Relevant facts and circumstances: You were born in Country Y. You are a dual citizen of Country Y and Australia. You became an Australian citizen in the late 1980's. You departed Australia in 2000 to start employment with a company overseas. You have been permanently living in Country Z since 2000. You have been lodging tax returns in Australia as a non-resident since 2000. Since leaving Australia in 2000 you have returned to Australia each year to visit your family. You would spend no more than 60 days in Australia visiting your family and you would then return to Country Z. You have siblings living in Australia and a sibling living in Country Y. You own the following property in Australia: • a share in a property in Australia • Term deposit which withholding taxes have been paid on interest income. • Term deposits and bank account with withholding taxes directly deducted from interest income. You lease a property in Country Z. You have some money and bank accounts in Country Z along with household items and personal items. You are single and live independently in Country Z. Your social network including friends are predominantly based in Country Z. You have been working for the same employer in Country Z since 2000. Your clients are all based in Country Z. You receive your income into your overseas bank account and the income is not sourced in Australia. In XXX 2019 you came to Australia on your annual visit to see your family. While in Australia visiting family a family member took sick. You commenced working in Australia for your Country Z employer. Your work duties did not change. You continued to pay tax in Country Z. Due to the pandemic you continued to work remotely for your overseas employer from Australia. You were not able to leave Australia as the Government would not permit Australian citizens to leave. You continued to pay the rent on your apartment in Country Z while in Australia and consider this apartment your home. You are living in the family home in Australia. You are not eligible to contribute to the PSS or the CSS Commonwealth super funds.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6(1) | 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 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. | Detailed Reasoning - 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 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. 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: • It was not your intention to be in Australia on a permanent basis. • You have remained in Australia initially due to your siblings illness and then due to the pandemic and your status as an Australian citizen meant that you were not able to leave Australia due to government rules. • You have been staying in a family property in Australia and working remotely for your Country Z employer in Australia. • You have been a non-resident of Australia for taxation purposes since 2000 and this has not changed for you. • it is not your intention to live in Australia and you will leave Australia as soon as you are able to. • You are not a resident of Australia under the resides test. | 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 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 Y and your domicile of origin is Country You became an Australian citizen in the late 1980's. It is considered that you did abandon your domicile of origin in Country Y and acquire a domicile of choice in Australia. Your domicile 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 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: • you do not intend on living in Australia • you are only in Australia due to your siblings illness and the pandemic • you have a home in Country Z which you are maintaining while in Australia Therefore, you are not a resident of Australia 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 have been in Australia for 183 days or more in the 2020 and 2021 income years. We now need to consider whether we are satisfied that, during the 2020 and 2021 income years, your usual place of abode was outside Australia and your intention was to take up residence in Australia. In the context of the 183- day test, a person's usual place of abode can include both a dwelling or a country where the person usually resides. A person can have only one usual place of abode under the 183- day test. However, it is also possible that a person does not have a usual place of abode. This is the person who merely travels through various countries without developing any strong connections. If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, it is necessary to examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode (Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836). To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income year [s] and that you did not intend to reside in Australia. In respect of the usual place of abode this takes into account that: • Your usual place of abode is in China and you have maintained this abode while you have been in Australia. • You did not intend on being in Australia for the length of time you have and you do not intend on staying in Australia on a permanent basis. • The only reason you have been here so long is due to initially your siblings illness and then the pandemic which meant you were not able to leave Australia. 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 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. | Detailed Reasoning - Conclusion: As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes.