Private ruling: International - residency
Date of advice: 7 September 2022
Published: November 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 March 20XX

Ruling: Q1: Were you an Australia resident for tax purposes for the period from March 20XX until your departure date in December 20XX? | A1: Yes.

Relevant facts and circumstances: You are an Australian citizen. You are not a citizen of any other country. You were born in Australia and lived in various towns growing up. In 19XX you left Australia to commence work in Country A. From May 19XX to April 20XX you were employed by Employer A, the head office being in City A, Country B working in numerous roles over that time. From April 20XX to present you were seconded to work in another senior role involving a joint venture. You received a residence visa in Country A in early 19XX which allowed you to live and work in Country A. Whilst maintaining the Country B residence visa, you used a business visa to work in Country C. In October 19XX you met your spouse. Your spouse was born in a city in Country B. You have X children. Between February 20XX and June 20XX you and your family lived in City A in Country B. You lived in a four bedroom, two storey villa. Your spouse owned this property in their sole name ( City A Accommodation ). They acquired it in July 20XX. For four years, while you were on secondment in Country C, you initially lived in an apartment, which was provided to you ( First Country C Accommodation ). Your family continued to live in City A while you were working in Country C. In June 20XX, your spouse and children moved to Australia. You continued to live and work in Country C. Your spouse and children: (a) Initially lived in a rental in Australia for a period of one year ( First Rental Property ) and, (b) Subsequently moved to a rental property in Australia ( Second Rental Property ). When you were directly hired by your seconded employer, you used a Hotel as your primary residence ( Second Country C Accommodation ). You then travelled to City A and stayed at a hotel in City A while your employer was in the process of renewing your visa for Country C. During this period, you continued to have a valid Country B resident permit, which is why you temporarily stayed in City A while your visa for Country C was being renewed by your employer. Up until March 20XX, you had only visited Australia in January 20XX to put your child into boarding school. In March 20XX, while waiting for your visa to be renewed, you decided it would be a suitable time to take a month's leave and you travelled to Australia to visit your family. The leave was already planned before the pandemic began in March 20XX. You had planned to return to Country C at the end of your leave. The outbreak of COVID-19 pandemic led to lockdowns and border closures and you remaining in Australia for an extended period. From March 20XX to December 20XX you stayed in Australia with your family. While in Australia, your residence visa in Country B was cancelled because you were outside of the country for a period longer than six months. In April 20XX you started a new role, that involved a project in Country C. You are employed in another senior role. To fulfil this role while still in Australia, you worked from the Second Rental Property and aligned your hours with the working hours in Country C. Most of your personal assets were stored at the City A Accommodation or the First Country C Accommodation until around May 20XX. You then arranged for your personal belongings to be put into storage In Country C. Your personal belongings were made up of clothes and other similar personal items. You did not have any household items or significant assets because, due to the nature of your employment, you were generally always given fully furnished apartments to live in by your employer. You did not have any vehicle, bike or similar asset in Country C. In June 20XX the City A Accommodation was sold and the family car and personal belongings were shipped to Australia. Your personal belongings in Country C were collected from the Second Country C Accommodation and put into storage at a friend's house. While there were limited international flights, flight restrictions did not remain in place for the entire period you were in Australia. Although there were periods that you were physically unable to leave Australia due to restrictions, there were times that you could have left Australia, but decided not to. You were worried that you might not be let back into Australia if you left. You were also concerned about the challenges of coming back into Australia to visit - which included the quarantine process, the period of time needed and additional costs. You were concerned about the vaccine process and the number and timing of vaccines required and available. You were cautious regarding leaving Australia because: During the 20XX income year you had approximately X in a bank account in City A. During the 20XX income year you had the following assets in Australia: (a) A number of cars (b) Cash of approximately $XX as at 30 June 20XX (c) Australian shares totalling around $X! (d) Shares in a corporate trustee of a family in Australia, and (e) A bank loan for $X in your name. Neither you or your spouse are: (a) A member of the superannuation scheme established by deed under the Superannuation Act 1990 , or (b) An eligible employee for the purpose of the Superannuation Act 1976 . You have never been an employee of the Commonwealth Public Service. You intend to continue to live and work in Country C. You have no intention of returning to Australia on a permanent basis for the foreseeable future. In August 20XX you received a business visa to allow you to travel back to Country C. You returned to Country C on XX December 20XX. You received your residence visa for Country C in approximately April 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(1) | Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Having considered your circumstances as a whole and the residency tests, it has been determined that you are a resident of Australia for income tax purposes for the period from when you arrived in March 20XX until your departure date on XX December 20XX. | 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 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 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: • 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. Application to your situation We consider that your circumstances are consistent with you residing in Australia from the date of your arrival in Australia in March 20XX until your departure. We understand that it was your intention to return to Country C at the end of your trip to visit your family in Australia, and you have retained ties to Country C. However, on the balance, your circumstances demonstrate that you were residing in Australia according to the ordinary meaning of the word. In particular, your family ties in Australia, your intention to remain in Australia until the COVID situation had eased, your Australian assets, your previous accommodation being short term stays at the Second Country C accommodation and the Hotel in City A, and your physical presence in Australia, all point to you residing in Australia. We balanced these circumstances against your stored assets in Country C, and your Country C based employment that you have been performing remotely from home at the Second Rental Property. You chose to remain in Australia for the period it took for the COVID related complications to be resolved and it has always been your intention to return to Country C when your visa for Country C was renewed by your employer. However, it is not a requirement of the resides test that the intention to reside in Australia be permanent, or that all ties be severed. While you did not intend on being in Australia permanently, you had established a settled presence in Australia during the relevant period. Your connections to Country C were not strong during the time you were in Australia as your family are now living in Australia and you did not have specific property that you were holding onto in Country C or City A. You are a resident of Australia under the resides test. Although the law only requires you to be considered a resident under one test, for completeness the other tests are also considered. | 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 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. Application to your situation In your case, you were born in Australia and your domicile of origin is Australia. You left Australia in 19XX and have been living and working overseas ever since. You have stated that your intention is to remain living overseas indefinitely. You married, had a family, and had been living and working in City A since 19XX, where you held a residence visa. Since April 20XX you have used a business visa to live and work in Country C. You have also stated that, it was always your intention to return to your life overseas subject to COVID restrictions easing. It is considered that you abandoned your domicile of origin in Australia and acquired a domicile of choice in Country B However, during the period you were in Australia, you lost your residence visa from Country B as you had been absent for six months. As you no longer held a permanent right to reside in Country B and your residence visa for Country C had not yet been granted, at that point in time, it is considered that your domicile reverted back to your domicile of origin in Australia. Therefore, your domicile during the relevant period 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. Application to your situation We have taken the following into consideration when deciding whether your permanent place of abode is outside Australia: • You have lived overseas since 19XX, and in Country C since 20XX. • Your spouse and children moved to Australia in June 20XX, while you remained in Country C. • You returned to Australia to visit your family in March 20XX but remained in Australia until December 20XX. While you were here you stayed with your spouse and children in the Second rental property. • You worked remotely from the Second rental property. • During the period you stayed in Australia, you did not have accommodation in Country C or City A available to you. • You had some personal belongings stored in Country C. • You were granted a business visa for Country C in October 20XX. • You departed Australia to live and work in Country C shortly after. • You did not receive a residence visa for Country C until another X months had passed. • You have no intention on of returning to Australia on a permanent basis for the foreseeable future. Based on the facts provided you do not have a permanent place of abode outside Australia, and you have not definitely abandoned Australia for the relevant period. Your family live in Australia, your children attend school here, and you lived with them as a family, working from home during that period. The Commissioner is not satisfied that your permanent place of abode is outside Australia. Therefore, you are a resident of Australia under the domicile test at least from the date you no longer held a resident visa in Country B. | 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. Application to your situation You have not been present in Australia for 183 days or more during the 20XX and 20XX income years. Therefore, you are not a resident under this test for the 20XX and 20XX income years. You have been in Australia for 183 days or more in the 20XX income year. Therefore, you will be a resident under this test for the 20XX income year unless the Commissioner is satisfied that your usual place of abode was outside Australia and you do not have an intention to take up residence in Australia. | Detailed Reasoning - Usual place of abode: In the context of the 183-day test, a person's usual place of abode is the place they usually live, and can include a dwelling or a country. 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 case for a 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, we will 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. Application to your situation We have taken the following into consideration when deciding whether your usual place of abode is outside of Australia : • You left Australia in 19XX. You received a residence visa in the Country B in early 19XX, that allowed you to live and work there. • You have been living and working in either Country B or Country C ever since. You met your spouse in October 19XX and have since been raising a family. • Up until March 20XX, you had only visited Australia in January 20XX to put your child into boarding school. • In March 20XX, while waiting for your business visa for Country C to be renewed, you decided it would be a suitable time to take a month's leave and you travelled to Australia to visit your family. The leave was already planned before the COVID pandemic began. • The lockdowns and border closures as a result of COVID resulted in you remaining in Australia for an extended period of time, not departing Australia until XX December 20XX. • In the months leading up to your visit to Australia you were staying at a Hotel in Country C, and then a Hotel in City A. • While staying in Australia you lived at the Second Rental Property with your family. • You worked remotely from the Second Rental Property. • You are not estranged from your spouse. While your stated intention was to return to Country C, during the period of the ruling you established a settled presence in Australia. While the meaning abode can refer to a country and does need to be a specific property, you did not have a strong presence in Country C during this period based on your family being here and you not having available accommodation in Country C. Based on your circumstances, the Commissioner is not satisfied that your usual place of abode was outside Australia for the 20XX income year. | Detailed Reasoning - Intention to take up residency: To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here. Application to your situation While your stated intention was to return to Country C, this did not occur a month after arriving in Australia in March 20XX, but instead you departed on XX December 20XX. In forming the relevant state of satisfaction, the Commissioner has to take into account not only stated intention but also the objective facts. The objective facts including your physical presence, your family being here and your reduced connection to Country C and Country B during the relevant period, mean that the Commissioner cannot be satisfied that you did not intend to take up residence. Based on your circumstances, the Commissioner is satisfied that you did intend to take up residence in Australia for the relevant income years. | 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. Application to your situation 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: You satisfy the resides, the domicile and the 183 day tests of residency (for the 20XX income year) and so are a resident of Australia for income tax purposes for the relevant period.

the cost of flights was prohibitive | returning to Australia for an emergency related to your wife and children would have been difficult during this period and, | as you are over XX years of age you wanted to be fully vaccinated before travelling (and Australia had a slow vaccine rollout).