Private ruling: Residency for tax purposes
Published: September 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2014

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes from XXXX until XXXX? | Yes. | 2. Are you a resident of Australia for taxation purposes when your spouse joins you in Country Y? | No.

Relevant facts and circumstances: You left Australia to take up a work contract in Country Y in XXXX. Your spouse will remain in Australia until XXXX when their work ceases. You and your spouse are moving permanently to Country Y. You will return to Australia to visit family for approximately X weeks each year. Your family home will be rented out in XXXX when your spouse joins you in Country Y. You will have a bank account in Australia to facilitate the rental property. You will live in employer provided accommodation while in Country Y. You will take all your personal belongings to Country Y with you. You marked the leaving permanently box on your outgoing passenger card when you departed Australia. Neither you, nor your spouse, are Commonwealth Government employees.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: 1. the resides test 2. the domicile test 3. the 183 day test 4. the superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | 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 left Australia for Country Y to take up a work contract. Your spouse remains in Australia and will join you in XXXX. Your family home will be rented out in XXXX. You have gone to Country Y on a permanent basis. Based on the above, you will retain a continuity of association with Australia while you are in Country Y and your spouse remains in Australia and will be residing in Australia according to the ordinary meaning of the word until she joins you in Country Y. You will not be a resident under this test when your spouse joins you in Country Y and your continuing association with Australia will end. | 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. 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 satisfied that you have set up a permanent place of abode outside Australia for the period commencing January 2015 for the following reasons: • you have gone to Country Y on a permanent basis • your employer will provide you with accommodation in Country Y • you will take all your personal belongings to Country Y with you You are not a resident under this test for the period after your spouse joins you in Country Y. | Detailed Reasoning - The 183 day test: When 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 do not intend to be present in Australia for more than 6 months in any one financial year. 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 Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period your spouse remains in Australia. Once your spouse joins you in Country Y you won't be a resident of Australia for taxation purposes.