Private ruling: Residency for tax purposes
Date of advice: 6 May 2020
Published: June 2020
Ruling period: Period ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you an Australian resident for tax purposes for the 2019 financial year? | A1: No

Relevant facts and circumstances: You were born in a country overseas. You moved to Australia. You were granted permanent residency. You travel on a foreign passport. You have a visa that allows you to re-enter Australia as a resident for five years. You work and live in an overseas country. You have a four year contract with your employer with the possibility to extend. You are considered a tax resident of that country. Your intention is to remain there for a long time. You are not sure when you will return to Australia. Your spouse and child live in Australia. You maintain contact by telephone and visit once/twice a year for a week at a time. You provide financial support to your spouse and child. You live in a permanent residence owned by you and your spouse. Your spouse lives in a permanent home in Australia purchased by you and your spouse. You did not inform Medicare or AEC you were leaving Australia. You cancelled your Private Health Insurance. You and your spouse purchased two properties in Australia. You are still part owner of the home your spouse and child live in. Your personal effects are kept with your spouse. You do not receive any income from Australian sources. You have not notified any Financial Institutions that you are living overseas. You do not maintain any social connections with Australia. You are a member of two social sporting teams in the overseas country. You and your spouse have never been employed by the Commonwealth of Australia and were not contributing members of PSS or CSS.

Relevant legislative provisions: Subsection 6(1) of the ITAA 1936

Reasons for decision: Summary: There are four tests to determine residency of Australia for tax purposes. The resides test . The resides test is used to determine whether you reside in Australia according to the ordinary meaning of the word. There are different aspects of the resides test that would determine whether you reside in Australia, your behavior while in Australia, intention or purpose of presence, family and business or employment ties, maintenance and location of assets, social and living arrangements, physical presence in Australia. As you are living in an overseas country in a home that you own and only visited Australia for less than a month you do not meet this test. | Detailed Reasoning - The Domicile test: The domicile test is the first statutory test. You are an Australian resident if your domicile is in Australia, unless we are satisfied that your permanent place of abode is outside Australia. Taxation Ruling IT 2650 emphasizes the intended and actual length of time the individual stays overseas and the durability of association that is maintained with Australia. You have demonstrated that your domicile will not be in Australia by the following actions. . You have a permanent home overseas that you own . You have cancelled your Private Health Insurance in Australia. . You have not returned to Australia for greater than 7 days since departure and only on 2 occasions . You have a contract to work for 4 years overseas and intend to extend that. . You are a tax resident of the overseas country. You are a permanent resident of Australia and your spouse and child live in Australia however, you have a permanent place of abode overseas that you own, you have an intention to remain overseas for at least 4 years, and hope to extend that time, due to these factors and the small amount of time you have spent back in Australia since departure, the Commissioner is satisfied your permanent place of abode is overseas, and your new domicile of choice is overseas. You do not meet this test of residency. | Detailed Reasoning - The 183 day test: Where 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. The Commissioner is satisfied that you do not meet the 183 days test as you have travelled twice to Australia and have stayed no longer than 7 days. 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 PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You and your spouse are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test.