Private ruling: Residency status
Date of advice: 24 February 2016
Published: April 2016
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2014

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

Relevant facts and circumstances: You were born in Australia and are a citizen of Australia. You have a spouse and independent children. You accepted a permanent employment position in Country Z. Shortly after you and your spouse departed Australia to live and work in Country Z. You entered Country Z on a long term visa. On arrival in Country Z both you and your spouse lived in hotel accommodation briefly before securing a long term rental property. Since your departure from Australia you have returned on limited occasions for brief periods. Your assets in Australia consist of your family home, superannuation accounts, an investment property and bank accounts. The home you lived in prior to your departure was rented to tenants and the income received included in your income tax returns. Your personal effects were either, taken with you to Country Z, kept in storage or disposed of. Your assets in Country Z consisted of a bank account, credit cards and some furnishings. Your professional, social and sporting ties to Australia consist of family and friends. While in Country Z your professional, social and sporting consists of being a member of an expats group, establishment of relationships and socialising with colleagues and playing sport. Prior to your departure you informed your private health fund that you were departing Australia and to suspend your private health insurance. Prior to your departure you informed your bank that you were departing Australia and that they should withhold 10% withholding tax. Prior to you departure you informed your financial planner to alert your superannuation fund that you were no longer residents. After being employed for a number of months, you were informed that due to your employer restructuring their business operations your employment would be terminated. You intend to return to Australia and pursue other employment opportunities either in Australia or overseas.

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

Reasons for decision: Detailed Reasoning - Residency: 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 (and permanent place of abode) test, • the 183 day test, and • the superannuation test. The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia . The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. Based on the facts of your case it is clear that you will not satisfy any of the above tests for residency. Significant in reaching this conclusion is that accompanied by your spouse you have lived and worked in Country Z for a significant period of time. On arrival in Country Z you established long term rental accommodation with the intention remaining for a significant period of time. Further neither you nor spouse has ever been employed by the Commonwealth Government of Australia. | Detailed Reasoning - Your residency status: As you have not satisfied any of the tests for residency you are not a resident of Australia under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997 and therefore not a resident of Australia for income tax purposes.