Private ruling: Residency
Date of advice: 11 December 2018
Published: April 2019
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: December 2016

Ruling: Q1: Are you an Australian resident for taxation purposes for the period December 2016 to March 2018? | A1: No

Relevant facts and circumstances: You are both an Australian and county B citizen. You hold both an Australian and a country B passport. You departed for overseas in December 20XX. You did not have a return ticket when you left Australia. Your City A rental agreement ceased in January 20YY. You left your Australian job, sold some of your possessions and gave others away. You moved into share accommodation overseas in January 20YY, and signed a twelve month lease in September 20YY. You entered the overseas country using your country B passport and therefore did not require a visa to work or reside in the overseas country. You found a job overseas and commenced working in March YY. You returned to Australia for two weeks in November 20YY to visit family. In January 20ZZ you were offered, and accepted, a new job in Australia. You purchased a return ticket to Australia and returned in March 20ZZ. You still hold an bank account.

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

Reasons for decision: Summary: The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (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 and permanent place of abode test ● the 183 day test ● the superannuation test. 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 a resident of Australia for tax purposes if they meet 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'. The Commissioner may make reference to the following factors in determining whether a taxpayer is a resident under the ‘resides’ test: ● Physical presence in Australia ● Nationality ● History of residence and movements ● Habits and ‘mode of life’ ● Frequency, regularity and duration of visits to Australia ● Purpose of visits to or absences from Australia ● Family and business ties to different countries ● Maintenance of place of abode In your case, you have been residing overseas for XX months. You only returned to Australia for 2 weeks to visit family in November 20YY. You obtained work and signed a XX month lease agreement overseas. Although the period of time was only XX months you had intended to sat overseas permanently, you only returned to Australia as you obtained a new position back in Australia. You have an intention to return overseas in the future. In your particular circumstances you were not considered to be residing in Australia for the period December 20XX to March 20ZZ in accordance with ordinary concepts and are therefore not a resident of Australia under the resides test for that period. | 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. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. Your domicile of origin is Australia. You have not, nor were you required to, make any legal changes to your domicile as you hold a European Union (EU) member passport, which allows you to stay indefinitely in EU member countries. Consequently, you have not legally changed your domicile to overseas and have retained your domicile of origin, Australia. | Detailed Reasoning - Permanent place of abode: 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. In your case, you have been living overseas for a period of XX months and had established a permanent place of abode in that country. You did not have a permanent place of abode in Australia during that period. Consequently, the Commissioner is satisfied that your permanent place of abode remained outside Australia and you were not a resident of Australia under the domicile test for the period December 20XX until March 20ZZ. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You were present in Australia for less than 183 days during the period December 20XX until March 20ZZ and the Commissioner is satisfied that your usual place of abode was outside Australia for this period. You are not a resident of Australia 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 did not meet the requirements to be a resident under this test. | Detailed Reasoning - Your residency status: You were not an Australian resident for taxation purposes during the period December 20XX until March 20ZZ.