Private ruling: Residency
Date of advice: 12 January 2017
Published: June 2017
Ruling period: Year ended 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: You departed Australia in 20xx and relocated to Country B. You do not have a spouse or children that remain in Australia. You have obtained long term accommodation in Country B. You have fully furnished your residence in Country B. You have obtained employment in Country B and have worked the whole of the period that you have lived there. Your employment in Country B is on a continuing basis. You do not have a job waiting or on hold for you in Australia. You have returned to Australia twice since leaving, once to visit family and once to finalise taxation and financial matters. You intend to apply for permanent residency in Country B once you are eligible. You have notified Medicare that you have left Australia indefinitely. You have notified the Australian Electoral Commission that you have left Australia indefinitely. Your Australian based assets consist of one rental property that is being leased on a long term basis. You have deferred all social memberships on an overseas basis. You have deferred all sporting memberships on an overseas basis. You have not been employed by the Commonwealth of Australia at any time. You are not a member or eligible employee of a Commonwealth Superannuation Scheme.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision: Summary: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. In your case you have obtained long term accommodation and fully furnished this residence in Country B. Your property in Australia has been leased on a long term basis and is not considered your permanent home. Based on the facts of your case, the Commissioner accepts that you do not reside in Australia according to the ordinary meaning of the word; therefore, you are not a resident of Australia for taxation purposes. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Generally speaking, persons leaving Australia would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile by choice or by operation of law. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that “a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression.” In your case you intend to stay in Country B indefinitely; You have obtained employment on a continuing basis in Country B; You have obtained long term accommodation since arriving and remained there since; You have a property in Australia that has been leased on a long term basis. Based on these facts, it is therefore considered that you will establish a permanent place of abode in Country B. | Detailed Reasoning - The 183-day test: Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that your usual place of abode is outside Australia and you have no intention to take up residence here. As you do not intend to return to Australia and be present for more than 183 days continuously or intermittently you do not meet this test. As a result, you are not a resident under this test. | Detailed Reasoning - The superannuation test: You will be a resident if you are eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS) or you are the spouse or child under the age of 16 years old of such a person. Generally, Commonwealth Government employees are eligible to contribute to the PSS or CSS. You have advised that you have not been employed by the Commonwealth of Australia at any time. You have also advised that you are not a contributing member of a Commonwealth Superannuation fund. Therefore, this test does not apply to you. | Detailed Reasoning - Your residency status: Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936