Private ruling: Residence for tax purposes
Date of advice: 24 July 2017
Published: November 2017
Ruling period: Year ended 30 June 201B | Year ending 30 June 201C | Year ending 30 June 201D | Year ending 30 June 202E | Year ending 30 June 202F
Date scheme commenced: 1 July 201A

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes before you left Australia in the 201B income year? | Yes. | Are you a resident of Australia for taxation purposes after you left Australia in the 201B income year? | No. | Are you a resident of Australia for taxation purposes for the 201C-202F income years? | No.

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 are a dual Country Z and Australian citizen. You obtained citizenship of Australia in 201A after living in Australia for a number of years. You worked in Australia up until late 201B. You went to Country Y in 201B and commenced work for the overseas branch of your Australian employer . You have accepted a permanent local contract with the overseas employer. You currently hold a Country Y employment visa which is for 2 years and can be extended. Your spouse and child joined you in Country Y in late 201B. You live in employer provided accommodation which is for the first 4 months of your employment in Country Y and you will rent accommodation which will be on a 24 month lease. You took personal items to Country Y but due to the cost of transporting household items and furniture you will purchase your own in Country Y. You have rented out your apartment in Australia. You intend on returning to Australia for 1-2 days twice a year for work purposes and 1-2 weeks a year for personal trips. You do not expect that your returns to Australia will exceed 20 days per year. Your spouse intends on returning to Australia for 1-3 weeks a year for personal trips. Your spouse does not expect that their trips back to Australia will exceed 40 days per year. You may also travel to other overseas countries for work purposes. You have suspended your private health cover in Australia. You have cancelled your gym and car insurance in Australia. You cancelled your novated car lease. You have cancelled your broad band and mobile phone contract in Australia. You have taken out health insurance in Country Y for you and your family. You have opened bank accounts in Country Y. You will work in Country Y for a minimum of 24 months. Neither you nor your spouse is eligible to contribute to the relevant commonwealth super funds.

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 Y in the 201B income year for work purposes. Your family remained in Australia until late in the 201B income year at which point they joined you in Country Y. You will be living and working in Country Y for at least 24 months. In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period. Based on the facts above you were residing in Australia according to ordinary concepts for the 201B income years you retained a continuity of association with Australia as your family remained in Australia in the family home until 201B at which point they left Australia to join you in Country Y. You were a resident of Australia for the 201B income year. For the 201C-202F income years you no longer have a continuing association with Australia and you will no longer be a resident of Australia for taxation purposes. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in 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 choice is Australia as you became a citizen of Australia in 201A. The Commissioner is not satisfied that you had a permanent place of abode in the 201B income year as you left for Country Y in 201B and your family remained in Australia until 201B. The Commissioner is satisfied that you have a permanent place of abode outside Australia for the 201C-202F income years for the following reasons: ● You will live and work in Country Y for at least 24 months ● Your family joined you in Country Y in 201B ● You will rent accommodation in Country Y ● You will purchase household items and furniture in Country Y ● You will only return to Australia for short visits while you are in Country Y You are not a resident under this test for the 201C-202F income years. | 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 in Australia for more than 183 days in the 201B income year. You will not be in Australia for more than 183 days in the 201C-202F income years. You are a resident under this test for the 201B income year and you are not a resident under this test for the 201C-202F income years. | 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 funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes in the 201B income year. You are not a resident of Australia for taxation purposes for the 201C-202F income years.