Did you cease being a resident of Australia for taxation purposes?
No. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: 1 July 20XX
You were born in Country Y. You are a citizen of both Country Y and Australia. You lived in Australia for around a number of years prior to going to Country Z. You lived with your spouse and child in Australia. You worked for Employer Z in Australia. You were offered a transfer to the Employer Z office in Country Z. You decided to take this offer. The move was a full relocation rather than a temporary assignment in Country Z. You accepted the offer, and you went to Country Z. It was your intention to be in Country Z for a number of years. You did not return to Australia for the duration of your stay in Country Z. You and your spouse sold most of your household effects in Australia, retaining only the minimum necessary items for your spouse to continue living in the home. You and your child transported your own personal belongings to Country Z, flying with several suitcases containing your personal belongings. You entered Country Z on a Foreigner Work Permit linked to your employment with Employer Z. The Work Permit permitted you to live and work in Country Z and included your child and your spouse as "accompanying family members".
Your spouse's ability to move to Country Z was dependent on securing employment in Country Z. On arrival in Country Z, you leased an apartment. You entered a lease. The Country Z apartment was selected and fitted out as the primary family home. The apartment was partly furnished, but you purchased substantial additional household items yourself in order to set up a functional home for day-to-day living in Country Z. Your child enrolled in and attended a local school in Country Z. You opened a Country Z bank account into which your Country Z employment income was paid and from which you met local living expenses. Your spouse remained living in the family home after you and your child relocated to Country Z. The property was not rented to third parties during your period overseas. Your spouse actively applied for positions in Country Z with a view to relocating and joining the family. In anticipation of that move, they obtained rental appraisals for the Australian property from local agents, with the intention of renting it out once they left Australia.
You did not proceed to lease the property because your spouse ultimately remained in Australia due to difficulty securing suitable work. The intention between you and your spouse was that they would relocate to Country Z once they obtained suitable employment and immigration approvals, at which point the Australian property could have been rented out or otherwise dealt with preparation for the intended relocation. A car was retained for your spouse's use while they remained in Australia, with the expectation it would be sold when they relocated to Country Z. You retained your existing Australian bank accounts while living overseas. Later in the year, Employer Z announced layoffs. Your Country Z role was identified for redundancy. Your employment with Employer Z ended on because of these layoffs. Your Country Z work visa was cancelled in connection with the termination. You returned to Australia shortly after your employment ended. You cancelled your Australian private health insurance after relocating to Country Z. You have cancelled Australian gym and club memberships and did not maintain ongoing social or sporting memberships in Australia.
In Country Z, you took steps to integrate, including enrolling in Country Z language classes and building social and community connections. You did not request removal from the Australian electoral roll or notified Australian financial institutions that you were a foreign resident, but you moved all of your banking and service notifications online. Neither you nor your spouse are eligible to contribute to the PSS or the CSS Commonwealth Super funds.
Income Tax Assessment Act 1936 subsection 6(1) Income Tax Assessment Act 1997 section 995-1
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... [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 everyone'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 You accepted a position with Employer Z to relocate to Country Z. You and your child went to Country Z, and you commenced working in Country Z shortly after your arrival. Your spouse remained in Australia in your family home for the duration of your stay in Country Z. Your spouse was not able to secure employment in Country Z and never relocated to Country Z. Your spouse made a number of trips to Country Z to try and get work without success. Your employment in Country Z was made redundant, and you and your child returned to Australia later in the same year that you left.
While it was your intention to go to Country Z for the duration of your contract the fact is that you didn't stay in Country Z. You did not abandon your connection to Australia. You were a resident under this 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 Y, and your domicile of origin is Country Y.
Your domicile of choice is Australia as you are a citizen of Australia. Therefore, your domicile 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 considering 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] FCAFC 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 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
• 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 you did not have a permanent place of abode in Country Z for the following reasons: • You were only in Country Z for a number of months • Your lease on the Country Z accommodation was not for an extended period of time. • Your spouse remained in Australia in the family home • You did not abandon in a permanent way your home in Australia which is evidenced by your spouse remaining in the family home and the family home being available to you for the duration of your stay in Country Z.
You are a resident under this test. 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 were in Australia for more than 183 days in the relevant income year. For the period 1 July 20XX to early in 20XX you were living and working in Australia and your usual place of abode was in Australia and you were a resident in Australia. The Commissioner is satisfied that your usual place of abode was in Australia for the 20XX income year and that you were a resident in Australia for the 20XX income year. You are 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. 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. Conclusion : You were a resident of Australia for taxation purposes for the relevant income year and the period you were in Country Z.