Private ruling: Residency
Date of advice: 28 October 2021
Published: January 2022
Ruling period: Year ending 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you a resident of Australia for taxation purposes for the years ending 30 June 20YY and 30 June 20YY? | A1: No.

Relevant facts and circumstances: You were born in Australia and you are an Australian citizen. You have permanent resident status in Country A You have been a permanent resident for XX years. You intend to reside in Country A indefinitely. You are resident of Country A for taxation purposes. You have been a non-resident for taxation purposes in Australia from YYYY to YYYY. You have been an Australian resident for taxation purposes from YYYY to YYYY, having stayed in Australia for an extended period due to family reasons and setting up your animal A farming business. In YYYY, you have made the decision to spend more time in Country A. The reason for this is to spend more time with family and friends. You are limiting your visits to Australia solely for business purposes to attend to your business. Your de-facto spouse will accompany you on these visits. You will be lodging your Australian 20YY income tax return as a non-resident. You have an extensive social circle in the Country A. You only have some friends from university in Australia, however most of your social network is in the Country A. Your immediate family reside in the Country A, including your de-facto spouse, your de-facto spouse's child and their extended family. You have a sister, half-brother, and father in Australia. Your two dogs have re-located to Country A from Australia in YYYY. You have a gym membership at a local gym in Country A. You have voting rights in Country A but are not enrolled to vote in Australia. In the Country A, you own two investment properties. You own a holiday home in Country A jointly with your de-facto spouse. All your motor vehicles (motorcycle, boat, and bicycle) are all located in Country A. You have a main residence in Country A where you reside with your de-facto spouse and her son. It is fully furnished and always available for you when you are absent in Australia. You own an animal A and animal B farm. It is run by a manager and employs two people. You have a savings account and term deposit accounts in Australia that are mainly related to the animal A farm. There is a residence on the farm which you reside in when you are in Australia. However, you do not consider this your home. You own farm vehicles and a bicycle in Australia. You intend to travel to Australia for a varying period of less than 3 months to 4 and a half months per income year. The main reason for visiting Australia is to manage the animal A business in the critical periods around shearing, birthing, and mating times. This occurs around November to March/April each year. You will also visit your family in Australia. You have to apply for a specific travel exemption to enter and depart Australia. For each travel movement, you are required to provide documentary evidence of your residence in Country A, tax returns, driver's licence, bills, and bank statements.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 6(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: - You will not physically be in Australia for more than four and a half months per income year. - You have no intention of residing in Australia permanently. Your main reasons for visiting Australia are to attend to your farming business and visiting family. - You are a permanent resident of Country A and a resident of Country A for taxation purposes. - You have limited assets in Australia. Your main residence, investments, and household/personal effects are mostly located in Country A. - You have minimal social ties with Australia. Your main social circle of friends is in Country A. - You have taken steps to sever your ties with Australia such as not being enrolled in the electoral roll and re-locating your dogs to Country A. 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 Australia and your domicile of origin is Australia. It is considered that you did abandon your domicile of origin in Australia and acquire a domicile of choice in Country A. You obtained permanent residency XX years ago and you intend to live there indefinitely. | 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 will not be present in Australia for 183 days or more during the 20YY and 20YY income years. You will not be 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 for the years ending 30 June 20YY and 30 June 20YY.