Private ruling: Residency
Published: December 2014
Ruling period: Year ending 30 June 2009 | Year ending 30 June 2013 | Year ending 30 June 2014 | 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 2008

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

Relevant facts and circumstances: You were born in Australia of which you are also a citizen. You have not been granted permanent residency by any country. Prior to your departure from Australia, you were living in a rental property. You rented this property with your then partner. You departed Australia for foreign country #1. Since then you have been engaged as an aid and development professional by various international aid and development organizations. Your career necessitates that you live in overseas locations to perform the duties required of you except when you were required to undertake professional development which you completed in Australia. In foreign country #1 you held a business visa whilst in foreign country #2, foreign country #3 and foreign country #4 you held work permits. The business visa held in foreign country #1 was self-sponsored whilst the visas held in foreign country #2, foreign country #3 and foreign country #4 were employer sponsored. All the visas were time bound and would require additional steps in order to be converted to a permanent visa. You presently hold a one-year multiple entry visa for the foreign country #5 where you will be joining your partner next year at the end of your current assignment in foreign country #4. You formed the intention to make your home indefinitely outside Australia after you travelled to foreign country #1 undertake an internship. During this internship, you realised that this was the field of work you wanted to pursue and immediately made plans to depart Australia indefinitely. You returned to Australia from the internship and withdrew from your lease, disposed your household property and departed once more. You have no plans to return to Australia to live or work. The earliest that you would return to Australia would be for a vacation. When you were not on an overseas assignment you visited Australia you spent time with family. Apart from family, you do not have any family in Australia. Other that return trips to Australia to visit family and for your professional development, you have returned for: • a wedding; and • the death of a relative. You do not hold any return ticket to Australia. In foreign country #1, you rented a house. In foreign country #2, foreign country #3 and foreign country #4, you were required to live in employer provided accommodation owing to the highly insecure nature of the living environments and the prevailing security policies. You do not own any property or investments in Australia. You do not have any assets overseas. You are not receiving any income from Australian sources. You have no position or job being held for you in Australia. You do not have any social or sporting connections in Australia. In foreign country #1, you were part of an informal fitness group. You have/had no social or sporting connections in foreign country #2, foreign country #3 and foreign country #4. You are not married nor have you ever held a position with the Commonwealth Government of Australia. You have you advised the Australian Electoral Office to have your name removed from the electoral roll. You have you advised any Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax can be deducted. You notified a bank of your departure when you left. You do not have any investments with any Australian companies. You do not hold any private health insurance in Australia. You were not aware that you have to remove your name from Medicare's records. You will request Medicare to do so. You have not lodged tax returns in any other countries. The reason for going overseas when completing the Australian Immigration Outgoing passenger card was visitor or temporary entrant departing.

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)

Reasons for decision: Summary: 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 foreign resident, your assessable income includes only income derived from an Australian source. 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 test • the 183 day test • the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (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 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 (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: You have provided a copy of the new contract. (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. | Detailed Reasoning - (i) Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In relation to this the AAT has stated that: Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home. You departed Australia to live and work overseas. Since then, you have returned to Australia for training or to visit family. | Detailed Reasoning - (ii) Nationality: The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case. You were born in Australia and you are a citizen of Australia. | Detailed Reasoning - (iii) History of residence and movements: Since departing Australia, you have lived and worked in foreign country #1, foreign country #2, foreign country #3 and foreign country #4. During this time you returned to Australia to visit family and undertake work related training. | Detailed Reasoning - (iv) Habits and "mode of life": The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. You have lived and worked overseas since departing Australia. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country. Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during period of two years and seven months to be residing in Australia. Since departing Australia you have returned to Australia to: • visit family • attend a wedding • attend professional development • attend the death and funeral of a relative. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: You left Australia to live and work overseas. You have returned to Australia to meet family and attend a funeral. You returned to Australia complete a work related training course. | Detailed Reasoning - (vii) Family and business ties to Australia and the overseas country or countries: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. | Detailed Reasoning - Family: You have family in Australia. | Detailed Reasoning - Business or economic: You are employed in foreign country #4. | Detailed Reasoning - Assets: You have a bank account in Australia | Detailed Reasoning - (viii) Maintenance of Place of abode: The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. Before departing Australia you moved out of the rented dwelling you had lived in. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. There are several factors outlined above which indicate that you have ceased to be a resident of Australia. Specifically: • you have live and worked overseas for several years • you do not maintain of a place of abode in Australia • you have returned to Australia for short visits • you have no assets in Australia except a bank account Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you will not maintain a continuity of association with Australia for the relevant period. | Detailed Reasoning - The domicile and permanent place of abode 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. As you are still an Australian citizen while living overseas, your domicile is Australia and remains unchanged. | 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. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. Although you maintain an association with Australia through family, as well as a friend and a bank account, your associations with foreign country #4 are more significant as you have obtained employment which will continue for several more years and you are living in long term hotel accommodation provided by your employer. Based on these facts, the Commissioner is satisfied you have a permanent place of abode outside of Australia. Therefore, you are not a resident of Australia under the 'domicile and permanent place of abode' test of residency. | Detailed Reasoning - The 183-day test: Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. You have not been present in Australia for a total period of more than half of the year of income. Therefore you are not a resident of Australia under the 183-day test. | Detailed Reasoning - The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (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 have stated that you are not eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Therefore, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Your residency status: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes for the years of the ruling.