Residency

Are you a foreign resident for taxation purposes?

Yes. This ruling applies for the following period : Year ended 30 June 20XX The scheme commences on: 1 July 20XX

You were born in Country A. You became an Australian citizen during the year ended 30 June 19XX. You became a citizen of Country B during the year ended 30 June 20XX. You had been in Country B for over XX years and had planned to live there permanently. Your family is made up of your spouse and your children. Your children were born in Country B. You and your family arrived in Australia during the COVID-19 pandemic in the year ended 30 June 20XX. When completing the incoming passenger card, you stated your residency status as 'Australian residency' - you would normally state Country B residency but had to state Australian residency to be allowed entry into Australia during the COVID border closures. You planned to remain in Australia for a short holiday duration to ensure you could see your elderly parents due to health concerns. After arriving in Australia, you could not return to Country B due to closed borders so you waited for communication regarding when the borders would open. Your intention was for you and your family to return to Country B together as soon as the borders reopened.

You had return tickets booked but they were flexible and could be changed depending on when the borders re-opened. You continued to work for a Country B-based company through ZOOM during evenings. You had held this job for the past XX years and they expected you to return. Your work did not involve any Australian related meetings or business. Your spouse had Country B-based employment, but this was paused temporarily during COVID. Your children continued with Country B-based school through ZOOM but due to difficulties with time zones, you enrolled them at schools in Australia during the year ended 30 June 20XX. They remained enrolled in their Country B school with full tuition paid for the school year and the teachers expected them to return to school. When you arrived in Australia you stayed at a hotel and completed the mandatory hotel quarantine for XX weeks. After hotel quarantine you stayed with your parents for one week. You then stayed at a hotel in a one bedroom suite, with your children sleeping on the living room sofa, while you awaited the borders re-opening.

You then moved to another hotel after approximately XX weeks as the price of accommodation at the previous hotel was increased. You had a home in Country B which had recently been renovated. You used your Country B credit card to pay day to day expenses. You had residual bank accounts in Australia from XX years ago. You had bank accounts in Country B as well as investment accounts and a retirement account. You continued to be registered at your church and maintained connections with friends and professional employment in Country B. You did not develop any professional, social or sporting connections in Australia. You took out private health insurance in Australia toward the end of the year ended 30 June 20XX. You also had Country B-based health insurance. You were enrolled in Medicare, as you had not cancelled it, but you do not use it. You had a driver's licence in Australia, as you had not cancelled it. You were not enrolled with the Australia Electoral Commission during the year ended 30 June 20XX. You continued to have your mail sent an address in Country B. You were actively seeking flights back to Country B online but could not leave due to closed borders.

Due to critical work related issues, your work identified a specific way for you to fly back to Country B. You scheduled your flight back to Country B during the year ended 30 June 20XX but postponed your flight to get your COVID vaccine. You were one of the first people in Australia to get vaccinated and fly immediately after the second vaccination. Your family remained in Australia as they were not able to get COVID vaccinations and the border remained closed. You returned to Country B toward the end of the year ended 30 June 20XX and after discussions with work, then decided that you and your family would officially return to Australia. Your resigned from your job with at the Country B-based company. You placed your house in Country B up for sale. You flew back to Australia but continued to be employed by the Country B-based company. You then commenced a new job with an Australian based company during the year ended 30 June 20XX. Your travel movements going forward will consist of a combination of international and domestic trips.

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

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 arrived in Australia during the 20XX income year with your spouse and children to visit your elderly parents -       You were unable to return to Country B due to border restrictions

-       You left Australia toward the end of the year ended 30 June 20XX -       You stayed in short-term hotel accommodation while in Australia -       You continued to work for a Country B-based company through ZOOM during the evenings -       You had a home you owned in Country B -       You maintained social connections in Country B -       Your intention was to return to Country B as soon as possible and live there permanently You are not a resident of Australia under the resides test for the period 1 July 20XX to 30 June 20XX. 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 A and your domicile of origin is Country A. You immigrated to Australia and became an Australian citizen during the year ended 30 June 19XX. It is considered that you abandoned your domicile of origin in Country A and acquired a domicile of choice in Australia. You immigrated to Country B and became a Country B citizen during the year ended 30 June 20XX. It is considered that you abandoned your domicile of choice in Australia and acquired a domicile of choice in Country B.

Your domicile remains in Country B for the period 1 July 20XX to 30 June 20XX as you had no intention of living in Australia indefinitely. Therefore, your domicile is Country B, 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 20XX income year. 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 Australia: -       You arrived in Australia during the year ended 30 June 20XX with your spouse and children to visit your elderly parents -       You were unable to return to Country B due to border restrictions -       You left Australia toward the end of the year ended 30 June 20XX -       Your intention was to return to Country B as soon as possible and live there permanently -       You continued to work for a Country B -based company through ZOOM during the evenings -       Your children remained enrolled in school in Country B -       You maintained Country B -based health insurance -       You had a home you owned in Country B -       You maintained social connections in Country B Based on your circumstances, the Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income year. 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: -          You planned and took steps to return to Country B as soon as possible -          You stayed in short-term hotel accommodation while in Australia Based on your circumstances, the Commissioner is satisfied that you did not intend to take up residence in Australia for the relevant income year. 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 year ended 30 June 20XX.