Private ruling: Your residency status
Date of advice: 29 March 2017
Published: August 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: Yes.

Relevant facts and circumstances: You are originally from Country X. You are now an Australian Citizen. You were offered temporary work in Country X. The period of your employment contract is set and cannot be extended. You travelled to Country X on a visa. The purpose of your stay in Country X is for your temporary work transfer and you do not intend to remain in Country X after completing it. You hold an airline ticket for your return to Australia. You are unmarried and no family members accompanied you overseas. Your household effects have remained in your Australian residence. Your Australian residence has been rented for the duration of your overseas employment. You have a residence in Country X for the period of your employment. This residence has not been provided by the employer. You have not notified the Australian Electoral Office (AEC), Medicare or your private health insurance provider that you are a foreign resident.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 955-1(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. Where a taxpayer has immediate family in Australia and has maintained assets in Australia, under these circumstances they would be considered a resident of Australia for taxation purposes because they either meet the domicile and or the resides test(s) under subsection 6(1) of the ITAA 1936. | 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'. Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are: ● whether the person is physically present in that country at some time during the year of income ● the history of the person's residence and movements ● if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits ● if the person is outside the country for part of the relevant income year, the purpose of the absences ● the family and business ties which the person has with the particular country, and ● whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there. Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. In your circumstances you have lived in Australia for an extended period and have become a citizen. You have now departed Australia on a temporary basis for employment. Your employment contract is for a set period of less than a year without any option for extension. You have also expressed that you have no intention to reside overseas on a permanent basis. Due to this you have not notified the AEC, Medicare or your private health provided that you will be a non-resident for the period of your employment. You have maintained your property in Australia which you are renting for the duration of your overseas employment. You will be a resident under the resides test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the 'resides' test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument. | 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 Your country of origin is Country X and thus it is your 'domicile of origin', however, when you moved to Australia and became an Australian Citizen you adopted Australia as your domicile of choice. You have now returned to Country X on a temporary employment contract. Given this and the fact that you do not intend to remain there after your employment ends Australia will remain as your domicile of choice. You have not established a permanent place of abode in Country X. You will be a resident under the domicile test. | Detailed Reasoning - Your residency status: Accordingly you are 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.