We're a Baker Tilly network member
Learn more
Back to top
New draft ruling TR 2022/D2 – Individual Tax Residency Rules
Technical article

New draft ruling TR 2022/D2 – Individual Tax Residency Rules

The ATO has released draft ruling TR 2022/D2 regarding individual tax residency (“the Draft Ruling”).

When the ATO released the Draft Ruling last week, the existing residency rulings IT 2650 and TR 98/17, were withdrawn.

It would appear the ATO has released the Draft Ruling to modernise the previous rulings (which were both released in the 1990s) and to incorporate key findings from recent residency cases, in particular Addy, Pike and Harding.

What is the draft ruling about?

The Draft Ruling provides commentary and examples regarding the following Australian tax residency tests:

  • Resides test (primary test);
  • Domicile test; and
  • 183-day test.

The ‘superannuation test’ is not covered.

The Draft Ruling also touches on the impact that Australia’s Double Tax Agreements may have on an individual’s residency position.

What are the key takeaways?

Generally speaking the Draft Ruling is reflective of the decisions in the recent residency cases and does not appear to go too far off course of what would be expected.

Some key takeaways, drawn largely from the recent residency cases, are as follows:

  • There are no ‘hard and fast’ rules. A careful examination of all the relevant facts and circumstances of each individual taxpayer is still required.
  • A town or country can be a permanent place of abode, having regard to the pattern of moving around within a country, the nature of the accommodation and the behaviours of the individual.
  • Taxpayers do not need to seek a private ruling in relation to the Commissioner’s ‘state of satisfaction’ that is relevant for domicile and 183-day tests prior to lodgement. However, taxpayers may face penalties if their self-assessment is not reasonable.
  • An individual can commence residency and/or cease residency part way through an income year (i.e. even if an individual is in Australia for more than 183 days, they can still cease residency part way through the year and are not deemed to be a resident for the full income year).
  • Generally, temporary workers or working holiday makers in Australia are not considered Australian tax residents if their connections with Australia are temporary and their behaviours are consistent with not residing in Australia.
  • The Commissioner clarifies that the term ‘residence’ means tax residency. Obtaining a visa to migrate to Australia would not of itself be sufficient evidence of an intention to take up ‘residence’ in Australia.

Where to from here?

As the Draft Ruling is not in final form, taxpayers may need to pay additional underlying tax if the final ruling ultimately changes in a way that is unfavourable, but they should not be required to pay interest or penalties in respect of that underpayment on the basis they relied on the ruling in good faith.

The Draft Ruling is open for comments with submissions due on 25 November 2022.

While the Draft Ruling is helpful on a few points, it illustrates the difficulties inherent in a facts and circumstances test.

As of the date of this article, there is yet no word on whether the current Labor government will action the proposed changes to the individual tax residency rules in accordance with the Board of Taxation’s 2019 report.

For the time being, individual tax residency status continues to require a detailed analysis of all the facts and circumstances of the relevant individual and no two cases will be alike.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

Our experts

Andrew Beitz

Andrew Beitz



View profile
Tom Splatt

Tom Splatt



View profile
Denise Honey

Denise Honey



View profile
Michael Minter

Michael Minter

Managing Partner

Newcastle and Hunter

View profile
Leon Mok

Leon Mok

Managing Director


View profile
Alison Wood

Alison Wood



View profile

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
CPN Enquiry
Business Radar 2024
Federal Budget 2024-25
Student careers 2024-25
Search by industry