Private ruling: Residency status
Published: December 2012
Date scheme commenced: 1 July 2008

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | No.


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

Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. These tests are: · the resides test · the domicile test · the 183 day test · 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 resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests. | 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'. TAXATION RULING IT 2650: RESIDENCY - PERMANENT PLACE OF ABODE OUTSIDE AUSTRALIA, provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay. The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states: The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes. In your case, with the exception of two short work assignments in Australia you were living and engaged in overseas employment for an extended period, therefore you are not considered to have been residing in Australia. Accordingly, for the period that you were living and working overseas you were not residing in Australia and so were not a resident for taxation purposes under the 'resides test'. | 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. 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 prove an intention to make his or her home indefinitely in that country. From the information that you have provided, you were born in country T and therefore had a country T domicile. However you migrated to Australia and became an Australian citizen electing Australia as your domicile of choice, even though you remained a citizen of country T. After completing your studies your intension was to leave Australia and return to country T permanently therefore electing to revert back to your country T domicile. Therefore, as you have elected to revert back to country T as your domicile of choice you are not a resident of Australia for income tax purposes under the 'domicile test'. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for more than183 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 will not be in Australia for a period greater than 183 days for the income years included in this ruling. Accordingly, you are not a resident of Australia for income tax purposes under 'the 183-day test'. | Detailed Reasoning - The Superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. As you are over the age of 16 years and have not been a Commonwealth of Australia employee nor have you ever been a member of a CSS or PSS, you are not a resident of Australia under 'The Superannuation Test'. | Detailed Reasoning - Your residency status: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not an Australian resident for income tax purposes for the period included in this ruling.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are single with no dependants. | You were born in country T and resided there for a period. | After a time your family migrated to Australia and later became citizens. | You are a citizen of both country T and Australia. | After studying in Australia your intension was to move back to country T to live and care of your grandmother. | Your father, mother and sibling also moved back to reside just across the border from country T. | After searching for employment, you eventually found work in a hospital in country Y which allowed you to utilise your skills and provided you with an opportunity to move closer to country T. | You departed Australia to live and work in country Y for a period. | You arrived in country Y with a visa that allowed you to live and work in country Y. | You had all your personal items transferred to country Y and country T. | During this period you lived in a rented room. | When you lived in country Y you purchased items of necessity including a television, cooking utensils and other personal items. | · purchased your own food from supermarket to cook at home; | · purchased a mobile phone & obtained a country Y phone number; | · had all income earned banked into the country Y bank account; and | · registered with the country Y Medical council. | When you completed your contract in country Y, you made a quick trip to Australia to visit your sibling and friends. | You returned country T and began looking for employment. | When you returned to country T you took the remainder of your possessions with you. | After unsuccessfully seeking employment in country T you took up short term assignments in Australia. | In between the assignments you spent some time living in country T. | While in Australia you stayed with your sibling. | After a period you successfully applied for a fulltime position in country T. | While living and working in country T you: | · operated through country T bank accounts which have been in existence for an extended period of time; | · operated a country T credit card; | · set-up home in an apartment owned by sibling who no longer lived there because he lived in country Z; | · purchased home items such as a kettle, cutlery, bed linen, towels, and other essential items to make the place like a home; | · engaged a domestic helper to cook and clean; | · opened an mobile phone account; | · obtained country T Council practicing certificate as you was looking for opportunities to work in country T; and | · maintained your right to vote in country T elections. | Due to a lack of opportunity for advancement in country T you returned to Australia and commenced contract work. You took up contract work while seeking a full time position in Australia. | Upon your return to Australia you once again lived with your sister and brought with you various personal items, including clothes, shoes, kitchen utensils, books television set etc. | During the period that you lived and worked overseas your assets in Australia consisted of: | · superannuation accounts as a result of working in Australia. | During the period that you lived and worked overseas your overseas assets consisted of: | · a Bank account in country Y which was closed when you completed your country Y employment contract. | · bank accounts in country T | · superannuation scheme in country T. | Since returning to Australia you have purchased an investment property. | You do not have any social or sporting ties with Australia. | You did not have any social or sporting ties with country T or country Y. | You have never been an employee of the Commonwealth Government of Australia. | Since returning to Australia your intention is to seek full time employment in Australia.