Private ruling: Residency
Date of advice: 25 November 2016
Published: April 2017
Ruling period: Year ended 30 June 201X | Year ended 30 June 201X | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 201X

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No

Relevant facts and circumstances: You are citizen of Australia and country A is your country of origin. You and your family moved to Australia from country A in X and became Australian citizens a few years later. You and your family resided in Australia until X. On X you accepted an indefinite full-time position with an employer in country B. You acquired a X year renewable Residence Visa while in country B. You and your family lived in a furnished accommodation under X month tenancy contract. In X you received a separate offer of employment from another company to work in country C on a permanent full-time basis, which you accepted. Your employment in country B ended and you and your family moved back to the country A briefly to enrol your children in schooling and await Visa approval. It was/is your intention to reside overseas indefinitely. You were then moved to your new home in Country C and began work in X. You entered into a X month lease agreement to rent a semi-furnished accommodation. The furniture from your previous residence in country B was shipped to your country C residence. You do not/did not own a residence in Australia and sold or disposed of all your furniture. You and your family's personal effects were taken with you overseas. An unforseen development in regard to your child's schooling requirements meant that your spouse and children had to return to Australia to live. You will remain living and working in Country C and return to Australia up to 3 times per year using your 30 day annual leave entitlement to visit your family. You and your spouse are not eligible to contribute to the relevant Commonwealth super fund.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 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 ● domicile and permanent place of abode test ● 183 day test and ● Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and "mode of life" (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) Maintenance of place of abode. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. On X you accepted an indefinite full-time position with your employer in country B. You acquired a X year renewable Residence Visa while in country B. You and your family lived in furnished accommodation under a X month tenancy contract. In X you received a separate offer of employment from another company to work in country C on a permanent full-time basis, which you accepted. Your employment in country B terminated in X and you and your family moved back to country A briefly to enrol your children in schooling and await Visa approval. It was/is your intention to reside overseas indefinitely. Your family have to return to live in Australia due to the schooling requirements of your child and you will remain living and working in country C. Based on the facts above you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. Your domicile of origin is country A. Your domicile of choice was/is country B and then country C. The Commissioner is satisfied that you had a permanent place of abode outside Australia for the following reasons: You acquired a X year renewable Residence Visa while in country B, then accepted employment in country C. You do not/did not own a residence in Australia and sold or disposed of all your furniture. You and your family's personal effects were taken with you overseas. You entered into a X month lease agreement to rent semi-furnished accommodation. The furniture from your previous residence in country B was shipped to your country C residence. You are not a resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You were not and do not intend to be in Australia for more than 183 days in any of the applicable financial years. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test.