Residency

Are you an Australian resident for taxation purposes for the year ending 30 June 20XX?

No. This ruling applies for the following period : Year ending 30 June 20XX The scheme commences on: 1 July 20XX

You (Person A and B) are permanent residents of Country A. Person A is a citizen of Country B. Person B is a dual citizen of Country B and Australia. You and your two dependent children departed Country A to another continent to join your motor yacht and commenced circumnavigating around the world. You have lived in Country A for many years and intend to live there for the foreseeable future. During your circumnavigation, you maintained your apartment in Country A. You arrived in Country C. you purchased a motor yacht which was berthed in Country D. You sold your motor yacht in the same month. You anticipated to pick up the motor yacht in Country D and shipped your belongings from Country C to Country D. You arrived in Australia with an onward flight booked to Country D with the intention of collecting your motor yacht and continuing your circumnavigation. Person A entered Australia on a visitor visa, which was converted to a tourist visa. Person B entered Australia on their Australian passport. Prior to the ruling period, Person B had not been in Australia for many years. The onward flight to Country D was cancelled on three occasions due to travel restrictions.

You were granted special permission from the Australian Border Force to bring your motor yacht to Australia instead. The motor yacht arrived in Australia. The control permit provides the vessel must leave Australian waters by a certain date. Between your arrival and collecting your motor yacht, you stayed in hotel quarantine, airBnB's and hotels. Afterwards, you stayed in your motor yacht. You spent most of your time navigating around Australia. You waited until the Indian Ocean cyclone season ended and it was safe to depart Australian waters. You have no assets, immediate family, business, employment or social ties with Australia apart from extended family in Australia. You continued on to circumnavigate to various countries and will complete your circumnavigation in Country B later in the year. You intend to return to Country A to resume residing in your apartment and resume being active members of various social organisations. You have applied for your children to re-commence their schooling overseas after finishing the circumnavigation. You have no intention to return to Australia for the foreseeable future.

You and your spouse are not contributing members of the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS).

Income Tax Assessment Act 1936 Subsection 6(1) Income Tax Assessment Act 1997 Subsection 995-1(1)

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 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: 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 have taken the following into consideration when determining whether you meet the resides test: •         You have physically been in Australia for more than six months in the income year.

•         You intended to visit Australia as a tourist travelling around Australia. You have made multiple attempts to travel to Country D and were unable to due to travel restrictions. You collected you motor yacht from Australian waters instead as a consequence of travel restrictions outside of your control. •         You do not have an intention to settle or take up residence while you were present in Australia or in the foreseeable future. •         You reside in Country A on a permanent basis. Person A only has extended family in Australia. You have no employment or business ties to Australia. •         You have established a home in Country A and continued to maintain it while absent. You do not have a permanent home or any assets in Australia. •         You only had temporary living arrangements while in Australia, staying in hotels and AirBnB's. You resided in your motor yacht after it arrived in Australia. You have no social ties with Australia and still maintain social ties in Country A. You are not a resident of Australia under the resides test for the ruling period.

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 Person A

In Person A's case, you were born in Country B and your domicile of origin is Country B. You immigrated to Australia and became an Australian citizen and adopted a domicile of choice in Australia. It is considered that you abandoned your domicile of choice in Australia and acquired a domicile of choice in Country A. You obtained permanent residency in Country A and you intend to live there indefinitely. Therefore, your domicile of choice is Country A and you are not a resident of Australia under the domicile test. Person B In Person B's case, you were born in Country B and therefore, your domicile of origin is Country B. You obtained permanent residency in Country A and you intend to live there indefinitely. It is considered that you abandoned your domicile of origin in Country B and acquired a domicile of choice in Country A. Therefore, your domicile of choice is Country A and 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 have been in Australia for 183 days or more in the ruling period. Therefore, you will be a resident under this test 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. 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 in Australia: •         You have a continuing connection with Country A such as maintaining a main residence, association with social clubs and re-enrolling your children in school overseas. •         You have limited social and family ties with only extended family residing in Australia. •         You do not have any employment, business or financial ties with Australia.

•         You do not intend to reside in Australia for the foreseeable future and have departed Australia. •         You were unable to leave Australia due to travel and weather restrictions outside of your control and stayed in Australia to collect your motor yacht as a consequence of these restrictions. •         You have travelled to numerous places within Australia during your stay as a tourist. •         You have only stayed in short-term temporary accommodation including hotels, AirBnB's and your motor yacht during your stay in Australia. You do not have a permanent home in Australia. Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia for the ruling period. 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 We have taken the following into consideration when deciding whether you intend to take up residence in Australia:

•         Person B entered Australia on a visitors' visa which was then changed to a tourist visa. •         Your intention of staying in Australia was only temporary and you were in Australia as tourists. •         You did not take any steps to settle in Australia and intend to return to Country A after the conclusion of your circumnavigation. Based on your circumstances, the Commissioner is satisfied that you did not intend to take up residence in Australia for the ruling period. 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

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 ruling period.