Are you a resident of Australia for tax purposes from DD MM 20YY to DD MM 20YY?
No. This ruling applies for the following periods : Year ending 30 June 20YY Year ending 30 June 20YY Year ending 30 June 20YY Year ending 30 June 20YY The scheme commenced on: DD MM 20YY
You were born in Australia and are a citizen of Australia. On DD MM 20YY you relocated to the Country A to take up employment with a company based in Country A. The position is contractual, full time, renewable every xx years. You entered Country A on a standard employment visa that is tied to your employment contract. Your employer sponsors your visa. You were previously employed in Australia. You receive an Australian sourced pension. You do not have employment or a position held in Australia. You have opened a bank account in Country A. You have a spouse and xx dependent children. Your spouse and children relocated to Country A in MM 20YY. You sponsored the visa that allowed your spouse and children to enter Country A. The family residence permit is dependent upon you holding a valid visa. Your children are enrolled in school in Country A. Your spouse is self-employed. You and your spouse sold the family home in Australia. You and your spouse have purchased a home in Country A, freehold, where you and your family reside. You and your spouse have purchased two motor vehicles in Country A. You have a gym and pool club memberships in Country A.
You have cancelled your Australian private health insurance. You have advised Australian financial institutions, including Australian companies with which you have investments, that you are a foreign resident. You hold an Australian superannuation fund but will not make contributions while working overseas. You hold investments in shares through an Australian investment platform. You do not have any other assets in Australia. You have advised that you do not have any travel plans outside of Country A for the foreseeable future. You have not returned to Australia since departing in MM 20YY. You have travelled with your spouse outside of Country A for a short holiday in MM 20YY. When completing incoming and outgoing passenger cards, you provide your residential address in Country A. You have not advised what you state as your residency status. You have lodged a tax return in Australia for the 20YY income year as a resident. You will lodge future Australian income tax returns as a non-resident. You are not an eligible member of a Commonwealth superannuation scheme. You do not intend to return to live in Australia.
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 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 You are not a resident of Australia under the resides test for the period 1 July 20XX to 30 June 20XX based on the following: • You departed in Australia in MM 20YY and remain living in Country A. • You have travelled for a short holiday outside of Country A. • You have purchased a residence in Country A with your spouse. • You do not own any other residence in Australia. • You are employed and do not have employment or a position held in Australia.
• Your children moved to Country A at the same time as your spouse and attend school in Country A. • You do not intend to return to live in Australia. 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 Australia and your domicile of origin is Australia. You are a citizen of Australia. It is considered that you have not abandoned your Australian domicile and acquired a domicile of choice in Country A. You are not entitled to reside in Country A indefinitely, and while living in Country A you only hold a visa which is dependent on your employment. Therefore, you still have an Australian domicile. 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] 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 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 • 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 of Australia because: • You have been outside of Australia from MM 20YY. • You have been physically present in Country A from MM 20YY. • Your purpose is to live in Country A for an indefinite period. • You have opened a bank account in Country A. • You are employed in Country A.
• You have purchased a family home in Country A and have no permanent residence in Australia. • You do not maintain any professional or social memberships or associations in Australia. Therefore, you are not a resident of Australia under the domicile 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 will not be present in Australia for 183 days or more in the relevant period concerned. Therefore, you will not be a resident under this test for these income years. 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. Conclusion As you do not satisfy any of the four tests of residency, you will not be a resident of Australia for income tax purposes for the 20YY to 20YY income years.