Private ruling: Residency
Date of advice: 7 July 2022
Published: October 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a foreign resident for taxation purposes from when you departed Australia? | A1: Yes.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You are employed by Company A. Company A has held contracts since you joined them. You moved to Country A to work in a government position as a contractor for a number of years. There is an option to extend the contract by a further two years. You departed Australia during the year ended 30 June 20XX. You previously worked in a government position in Country B and in Country A. You stated that you remained an Australian resident while completing this work. These engagements were part of approved projects under section 23AF of the Income Tax Assessment Act 1936 . You are not a Country A citizen and you do not intend on applying for Country A citizenship. You have been granted a visa. This visa allows you to stay in Country A permanently. Your visa was supplied by the sponsoring department. You have rental accommodation in Country A. The lease on the accommodation expires in during the year ended 30 June 20XX but will be extended for a number of years. Prior to moving, you were renting in Australia and had been since early 20XX. You have a spouse, a Country C citizen who is pregnant with you and your spouse's first child. You spouse will be joining you in Country A. You have two children who live with their mother in Australia and will not be joining you in Country A. You pay an agreed upon amount of child support to the children's mother monthly. You will spend majority of your time in Country A for the next few years. You plan on travelling back to Australia to visit your two children for no more than 30 days per calendar year. At this stage, you do not intend on returning to Australia permanently. You also plan on travelling to Country C to visit your wife's family. Any future travel will be based off your leave periods with your employment. You have a bank account which you used to pay for your rental accommodation in Country A when you previously lived there - this account may have been deactivated but you intend on getting another one. You do not own a home in Australia or have a home loan. You had a three Australian bank accounts. Two of these were closed prior to departing and one will be kept as it has a good international card. You currently do not receive any income from sources outside Australia. You are not a part of any groups, clubs or church groups in any country. You informed the Australian Electoral Commission and Medicare of your departure. You do not have any private health insurance. You have a superannuation account in Australia which Company A pays into. You have a second superannuation account with a different fund which cannot be rolled over or further contributed to. You are not a member on behalf of whom contributions are being made to 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.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Detailed Reasoning - Overview of the law: 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 is the primary test for deciding the residency status of an individual. This test considers whether an individual resides 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 domicile test, 183-day test and Commonwealth superannuation fund test). Our interpretation of the law in respect of residency is set out in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia . We have considered the statutory tests listed above in relation to your situation as follows: | 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: 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when determining whether you meet the resides test: You are not a resident of Australia under the resides test for the relevant period. You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund 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 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 - Application to your situation: In your case, you were born in Australia and your domicile of origin is Australia. Although you have a visa that allows you to stay in Country A permanently and you intend to do so, the Commissioner is currently unable to determine on what date you may acquire a domicile of choice in Country A. Therefore, for the purposes of this private ruling, your domicile is still 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 their permanent place of abode outside Australia are: The Commissioner considers the following factors relevant to whether a taxpayer's permanent place of abode is outside Australia: (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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia: The Commissioner is satisfied that your permanent place of abode is outside Australia. Therefore, you are not a resident of Australia under the domicile test. | 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: | Detailed Reasoning - Application to your situation: You will not be present in Australia for 183 days or more during the 20XX, 20XX and 20XX income years. Therefore 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. | Detailed Reasoning - Application to your situation: You are not a member on behalf of whom contributions are being made to 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 for the relevant years.

the resides test (also referred to as the ordinary concepts test) | the Commonwealth superannuation fund 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. | You left Australia during the year ended 30 June 20XX to relocate to Country A | You live in long-term rental accommodation in Country A | Your spouse will accompany you to Country A | You have no intention of returning to Australia to live | You have an employment position in Country A | You will only return to Australia for no more than 30 days per year to visit your two children who are remaining in Australia. | 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. | You do not have a residence available to you in Australia | You removed yourself from the Australian Electoral roll and Medicare. | the person's usual place of abode is outside Australia, and | the person does not intend to take up residence in Australia.