Private ruling: Residency for tax purposes
Published: August 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2014

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes for the period you are in Country Y? | No. | 2. Is your Comcare payment assessable in Australia? | Yes.

Relevant facts and circumstances: You are a citizen of Australia. You were born in Country Z. You are not a permanent resident of any other country. Your spouse intends to take up a work position in Country Y. You will have a temporary visa to enter Country Y. Your spouse will commence the work contract in Country Y in September 2014. The contract is for 3 years. You intend to return to Australia at the end of your spouse's work contract in Country Y. You will rent your family home in Australia for the period you are in Country Y. You will rent accommodation in Country Y. You will ship your belongings to Country Y. Your spouse's employer will provide your spouse with an accommodation allowance in Country Y. You have two rental properties in Australia. You will retain a number of operating accounts in Australia relating to the rental properties. You will return to Australia to visit family approximately once a year. You are required to attend annual medical appointments in Australia as you receive a Comcare payment. You will be in Australia for 2 to 4 weeks for these appointments. You will stay with family or rent accommodation when you return for the medical appointments. Neither you nor your spouse are Commonwealth Government employees.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Rates Act 1986

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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: 1. the resides test 2. the domicile test 3. the 183 day test 4. 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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and 'mode of life' (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) Maintenance of place of abode. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. You are an Australian citizen who was born in Country Z. You will accompany your spouse to Country Y. Your spouse has a 3 year work contract. You and your spouse will return to Australia at the end of his work contract. You are required to return to Australia annually to attend medical appointments as you receive a Comcare payment. You will rent out your family home for the period you are in Country Y. Based on the above, you will not retain a continuity of association with Australia while you are in Country Y and will not be residing in Australia according to the ordinary meaning of the word. | 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 domicile of origin is Country Z. Your domicile of choice is Australia as you are a citizen of Australia. Therefore your domicile is Australia. 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. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. The Commissioner is satisfied that you have set up a permanent place of abode outside Australia for the following reasons: • you will be in Country Y for 3 years • you will accompany your spouse to Country Y for work purposes • you will rent accommodation in Country Y, and • you will ship your belongings to Country Y. You are not a resident under this test. | Detailed Reasoning - The 183 day test: When a person is present in Australia for 183 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 more than 183 days in any financial year. You are not a resident 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 are not a resident under this test. | Detailed Reasoning - Your residency status: You are a non-resident of Australia for taxation purposes for the period you are in Country Y. | Detailed Reasoning - Assessability of Comcare payment: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. Your Comcare payment is Australian sourced and therefore assessable in Australia. Some non-residents detailed in the Income Tax Rates Act 1986 ( Rates Act ) are taxed at the same rates as resident taxpayers. They are persons who, at all times during the year of income, are a non-resident, and to whom, at any time during the year of income, a pension, allowance or benefit is payable under: a) the Veterans' Entitlements Act 1986 b) subsection 4(6) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 , or c) the Social Security Act 1991 . If you do not receive one of these payments you will be taxed at non-resident tax rates.