CA ANZ has lodged a submission on the Draft Taxation Ruling TR 2022/D2 Income tax: residency tests for individuals (Draft Ruling). The timing of the release of the Draft Ruling has been helpful in providing some clarity in the application of the individual tax residency tests. Given the change in Government and the lack of information from the new Government as to whether they support the Board of Taxation’s proposed new individual residency test, the updated ATO views in the Draft Ruling will go along way in providing some certainty in the interim.

Some key points in the submission include:

• CA ANZ welcomes the consolidation of TR 98/17 and IT 2650 into a new Taxation Ruling and the update to take into account the developments in case law
• Paragraphs 103 and 104 of the Draft Ruling talk about self-assessment for residency and how individuals should take a reasonable view of how the Commissioner will regard the matters in the provisos for the domicile and 183-day tests. CA ANZ is concerned that the way the Draft Ruling is currently drafted, it will not be sufficient to show the Commissioner’s state of satisfaction for the domicile and 183-day tests.
• We note there is a consistent use in the Draft Ruling of terms such as ‘long term’ or ‘short term’ or ‘considerable time’ etc. Generally, the use of these terms is not accompanied by suggested time periods (other than paragraph74 where the Draft Ruling preserves the previous two-year ‘rule of thumb’ in relation to what is considered a substantial period of time). While the subjectiveness of these phrases does not provide absolute certainty that would otherwise be provided by a bright line test (such as those proposed by the Board of Taxation), the Draft Ruling and the associated case law provides a significant resource upon which well-advised taxpayers can draw
• Feedback on some of the examples in the Draft Ruling.