Private ruling: Residency
Date of advice: 22 August 2016
Published: September 2016
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period 1 July 20XX to 30 June 20YY? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You were born overseas and are an Australian citizen You acquired Australian nationality at birth. You were living in rental accommodation prior to your departure from Australia. You moved to country A on # to undertake a volunteer placement. You had a job in Australia and had taken leave without pay. You accepted a # year contract with a new employer in country B (while you were living in country A) and quit your job with # in Australia. You moved from country A to country B and stopped over in Australia for a short period prior to moving to country B. You lived in private rental accommodation in country A. You held a return airline ticket to Australia while working in the country A as it was a requirement of your visa. It was your intention to return to Australia to live at the end of your contract in country A and it is your intention to return to Australia to live at the end of your contract in country B. You had a working visa to enter country A which did not allow you to live there permanently. You have a working visa to enter country B and your renewable annual residency application is processing. Prior to moving to country A you lived in a rented apartment in Australia. Prior to moving to country B you lived in the country A. You do not have a place to live in Australia. You do not have any immediate family. You registered as an overseas elector with the AEC. You have advised financial institutions and Australian companies that you have savings and investments with, that you are a foreign resident. You have not advised Medicare or your private health fund that you are a foreign resident. You have not lodged tax returns in other countries. You have never been a Commonwealth Government of Australia employee.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1). | Income Tax Assessment Act 1936 Subsection 6(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. You went to country A on a working visa on # on a # month volunteer placement. You went to country B on a working visa on # on a # year contract. It was your intention to return to Australia to live at the end of your contract in country B You had a job waiting for you in Australia had you returned from country A. You returned to Australia on separate short trips while working in country A. You have not advised Medicare or your private health fund that you are a foreign resident. You intend returning to Australia at the end of your contract in country B. Based on the facts you were residing in Australia according to ordinary concepts as your connection to Australia was not broken. You were a resident under this test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. Your domicile of origin is a foreign country and your domicile of choice is Australia. You did not change your domicile of choice to the Country A or Country B as you were not a permanent resident or citizen of either 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. The Commissioner is not satisfied that you set up a permanent place of abode outside Australia for the following reasons: • You were living in private rental accommodation in country A and country B. • You had a working visa to enter country A which did not allow you to live there permanently. • You have a working visa to enter country B and your renewable annual residency application is processing. You were a resident under this test. | Detailed Reasoning - Your residency status: You were a resident of Australia for taxation purposes for the period 1 July 20XX to 30 June 20YY.