Private ruling: Residency
Date of advice: 27 June 2023
Published: 14 August 2023
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | 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 for the period DD MMMM 20XX to DD MM 20XX? | A1: No.

Relevant facts and circumstances: You were born in Country A. You moved to Australia as a child. You are a citizen of Australia. After completing high school in Australia you moved to Country B to pursue tertiary education. You have lived in Country B since moving there to begin your tertiary studies. You completed a Bachelors degree in your chosen field 4 years after moving to Country B. You enrolled in a 15-month Masters degree three months after graduating from your Bachelors degree. Due to disruptions caused by the COVID-19 pandemic your graduation for your postgraduate course was postponed for three months. After graduating your postgraduate course you decided to remain in Country B to gain career experience and obtained a visa which permits you to remain in Country B until a future date. Since moving to Country B you have lived as a tenant in the following rental properties, either as a lead tenant or cotenant on the relevant lease agreements: Duration Residence Three months Student accommodation One year and 10 months Residential property rental 10 months Residential property rental 10 months Residential property rental 12 days Short-term accommodation between lease One year and 4 months Residential property rental One year and 4 months Residential property rental Since moving to the UK you have visited the following destinations: Duration (days) Destination 40 Country A Travel 81 Australia family visit 5 Country A Travel 19 Australia family visit 39 Australia family visit 69 Country A Travel 11 Australia family visit 4 Hotel - Overseas location short term study 9 Hotel - Overseas locations for short term study 60 Australia family visit Your parents have paid your rent, living, and travel expenses since you moved to Country B. You still have a room available to you in your parents' house, which is where you stay when you return to Australia. You have taken freelance work in Country B since completing your studies. You worked as a casual retail sales assistant in Country B for around 6 months after completing your studies. You opted out of the pension scheme associated with this employment position. You have a Country B bank account to cover living expenses. You do not hold any other assets in Country B other than personal belongings. You have retained an Australian bank account. You do not have any other Australian assets other than personal belongings. You still have active health insurance under your parents' account. You have not removed yourself from the Australian electoral roll. You have recently decided to return to Australia and have begun the process of finalising your affairs in Country B to move back to Australia.

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

Reasons for decision: Summary: You do not meet any of the four tests of Australian residency for taxation purposes while you have been residing overseas, therefore you are not a resident of Australia for taxation purposes for the period DD MM 20XX to DD MM 20XX. | 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 (also referred to as the ordinary concepts test) • the domicile test • the 183-day test, and • the Commonwealth superannuation fund test. 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 TR 2023/1 Income tax: residency tests for individuals . 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: • 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. | Detailed Reasoning - Application to your situation: We have taken the following into consideration when determining whether you meet the resides test: • You have primarily lived in long-term (12+ months) rental accommodation in Country B since you moved there. • You have remained in Country B after completing your studies. • You have undertaken employment in Country B. • Your visits to Australia have been short in duration for the purpose of visiting family. • Your family live in Australia. • You have a room in your parents' house which remains available to you when you return to Australia to visit your family. You are not a resident of Australia under the resides test for the period 1 September 2016 to 30 June 2023. 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 a Country and your domicile of origin is in a Country. You immigrated to Australia in 2009 and became an Australian citizen. It is considered that you abandoned your domicile of origin and acquired a domicile of choice in Australia. Therefore, 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 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: • 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 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: • You have rented long term (12+ months) rental accommodation as a lead tenant or cotenant on the relevant lease agreements since moving to Country B. • You did not return to Australia immediately upon completing your studies in Country B. • You have undertaken employment in the Country B • Your visits to Australia have been short in duration for the purpose of visiting family. • You have a room in your parents' house which remains available to you when you return to Australia to visit your family. 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: • the person's usual place of abode is outside Australia, and • the person does not intend to take up residence in Australia. | Detailed Reasoning - Application to your situation: You have not been present in Australia for 183 days or more during the relevant 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 income years.