Are you a resident of Australia for income tax purposes pursuant to subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), while residing in Country A?
No. This ruling applies for the following periods : Year ended 30 June 20YY Year ended 30 June 20YY Year ended 30 June 20YY Year ended 30 June 20YY Year ended 30 June 20YY Year ended 30 June 20YY The scheme commenced on: DD MM 20YY
You were born in Country B on DD MM 19YY. You migrated to Australia with your parents and siblings at the age of X. You became an Australia citizen on DD MM 19YY. In 20YY, you met your future spouse, who was born in Country A, studied in Australia, obtained their license, and held a visa from DD MM 20YY until they were granted permanent residency on DD MM 20YY. You married your spouse in DD on MM 20YY. You and your spouse bought and furnished an apartment, in early 20YY, and stored all your personal belongings there. You used X of the car spaces at the property to park your car. On DD MM 20YY, you and your spouse welcomed your eldest child. On DD MM 20YY, you and your spouse welcomed your younger child. Your children hold dual citizenship in Country A and Australia, and you renewed passports in 20YY and 20YY. In early 20YY, your spouse learned their parent in Country A had a life-threatening illness, so you planned a temporary stay to support them. You applied for a visa in MM 20YY, expecting to stay several months, as it allowed a one-year stay - longer than a 90-day tourist visa.
You applied for and received the visa on DD MM 20YY, have renewed it easily, used it to work and access benefits, and plan to apply for permanent residency. You and your family arrived in Country A on DD MM 20YY and received the visa on the same day. You initially stayed in temporary accommodations, including with grandparents, weekly rentals, and hotels. In MM 20YY, you bought a house in Country A, intended as a holiday home, and used it without fully furnishing or setting it up as a permanent residence. Your parent-in-law passed away shortly after you and your family arrived in Country A. Your spouse inherited their business in Country A, intended to sell it, but did not complete the sale by the end of 20YY. Your eldest child attended preschool in Country A from MM to MM 20YY, and your younger child attended a local childcare centre. You returned to Australia with your family on DD MM 20YY for the holidays, then returned to Country A to continue efforts to sell the inherited business. Your parents and siblings live in Australia, and you maintain close ties with neighbours whose children grew up with your children.
Your spouse maintained their ability to re-enter Australia by renewing their Visa every X years, most recently on DD MM 20YY, valid until DD MM 20YY. You retuned to Country A with your family on DD MM 20YY to continue selling the inherited business and booked return tickets to Australia for DD MM 20YY. You ran a personal server in Australia via X for remote access from Country A and moved it to your parent's home after vacating your apartment in MM 20YY. After World Health Organisation (WHO) declared COVID-19 a pandemic on DD MM 20YY, Australia restricted travel from DD MM 20YY; facing high costs, cancellations, and quarantine, you stayed in Country A, where movement remined unrestricted. By DD MM 20YY, you decided not to return to Australia after you flight was cancelled and global disruptions escalated. You and your family chose to stay in Country A indefinitely, with your spouse taking over the inherited business instead and no plans to return to live in Australia. You made the house purchased in 20YY your permanent home, refurnishing it completely since most belongings remained in Australia.
On DD MM 20YY, you took only small items back to Country A, while you disposed of, gave away, or stored the rest, leaving larger items in Australia apartment to rent it semi-furnished. You engaged in the following social activities while residing in County A: • You have reached a level in language studies, supporting your integration into the local community. • On DD MM 20YY, you obtained a driver's license, replacing your Australian license and international permit. • On DD MM 20YY, your purchased and registered a second-hand car in your name under Country A's law. • Since early 20YY, you have been an active member of the club, regularly playing and socialising with residents. • In MM 20YY, you joined the club, where you made friends despite limited participation. • Since mid-20YY, you attended a weekly local meet-up for Country A language learners and residents, conducted in local language. You undertook the following economic activities during your time in Country A.
• You do not have work in Country A but earns your income from assets you acquired before relocating permanently, including from an online business and other investment income. • You held a basic long-term mobile plan since DD MM 20YY, using your visa granted on DD MM 20YY to qualify. You and your family began using Country A's healthcare system since mid-20YY, and your children have attended school there since then. Since relocating to Country A in MM 20YY, you maintained the following connections with Australia • Tax Compliance. You lodged Australian tax returns, declared rental income and expenses, mistakenly marked yourself as a resident, and plan to request amendments once the private ruling is issued. • Private Health Insurance. You maintained X private health cover for yourself and your family to access benefits during visits to Australia. • Financial Commitments. You hold a home loan on your Country A apartment and continues to pay related bills. • Banking and Cards. You retain Australian debit and credit cards for use during visits.
• Mobile Number. You kept your Australian mobile number (active since 19YY) for use during visits and because it is linked to apps, as well as various contracts and contacts. • Directorship. You remained a director of an Australian company. • Passport. You hold a valid Australian passport, issued on DD MM 20YY, expiring DD MM 20YY. • Vehicle. You kept a registered and insured car in Australia, stored in your apartment's car park, with personal items for use during visits. • Travel to Australia. You and your family typically visit Australia X a year. • Driver's License. You maintained your driver's license, renewing it in 20YY for X years, using it during visits and as a form of identification. • Superannuation. You hold an Australian superannuation account. Since 20YY, your spouse has taken short trips to Australia for treatment; you and your children joined them, enrolled them briefly in school (e.g. DD MM 20YY - DD MM 20YY), and plan to the same in 20YY.
On DD MM 20YY, you removed yourself from the Australian Electoral Roll after delaying the cancellation. You were fined for failing to vote and disputed at least one of the penalties. You filed tax returns for 20YY-20YY. A local accountant handles your returns and tax advice.
Income Tax Assessment Act 1936 subsection 6 (1) Income Tax Assessment Act 1997 section 995-1
Issue Residency Question Are you a resident of Australia for income tax purposes pursuant to subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), while residing in Country A? Answer No. 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: 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... 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 resides test is about 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. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia. Application to your situation We have taken then following into consideration when determining whether you meet the resides test: • You and your family lived in Country A continuously since DD MM 20YY.
• You permanently reside in a home whom you purchased in 20YY, which was fully furnished and now treated as your family home. • Your children attended school in Country A, and the family uses the country's healthcare system. • You participated in local community activities, holds a driver's license, and is socially integrated through clubs and language meetups. • You filed tax returns from 20YY. • Although, you visit in Australia (typically X a year), these are short-term family visits, not indicative of residency. You are not a resident of Australia under the resides test from the DD MM 20YY through to the DD MM 20YY. 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). 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. 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. Application to your situation In your case, you were born in Country B and your domicile of origin is Country B. You immigrated to Australia with your parents and siblings at the age of X and became an Australian citizen on DD MM 19YY. It is considered that you abandoned your domicile of origin in Country B and acquired a domicile of choice in Australia. You obtained citizenship in MM 19YY, and you intend to live there indefinitely. Therefore, your domicile of choice is Australia. 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 ( Harding ) 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:
• the intended and actual length of the taxpayer's stay in the overseas country; • 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; • 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; • whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; • the duration and continuity of the taxpayer's presence in the overseas country; and • 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 The Commissioner is satisfied that your permanent place of abode is outside Australia because: • You lived in Country A with your family • You have no intention of returning to live in Australia. • You disposed of or stored your belongings in Australia and rented out your apartment. Therefore, you are not a resident of Australia under the domicile test from DD MM 20YY through to 30 June 20YY. 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 any income year from DD MM 20YY to 30 June 20YY income years. Therefore, you are not a resident under this test.
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 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 for the period under consideration. Conclusion As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes from DD MM 20YY to 30 June 20YY.