Private ruling: Residency
Date of advice: 25 May 2016
Published: July 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you a resident of Australia for income tax purposes from the date you departed Australia? | A1: No.

Relevant facts and circumstances: You are an Australian citizen. Prior to your departure you were a resident of Australia for tax purposes and you were staying with your family. You departed Australia to commence your employment overseas. You are employed overseas for a period of time on a contract that has the option to be extended. You hold a relevant Visa. Your intention is and has been to move to the overseas country a period of time and then move to other overseas countries and to eventually settle back in the overseas country to have a family. You live in a rented apartment overseas. You are involved with a number of sporting clubs overseas. You have purchased a vehicle and other small personal effects since your arrival overseas. You have opened a bank account overseas. Your spouse has accompanied you overseas. You visited Australia once for a short time during the following financial year to see your family. Whilst in Australia during your visit you worked in Australia for an ex-employer for a short period of time. You informed the Australian Electoral Commission that you had departed Australia. You did not inform Medicare that you had departed Australia. Your ended your private health insurance policy upon your departure from Australia. You maintain an Australian bank account and a securities trading account. Since you have been overseas you have purchased and sold shares in a company via your Australian securities account. Prior to your departure you gave away or sold some household effects and some items remain with your family for their use. Neither you nor your spouse, have ever been employed by the Commonwealth Government of Australia.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(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. | 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'. In your case, there are various factors that indicate that are not residing in Australia. These factors include the following: You will be living and working in overseas for a period of time, your spouse accompanies you overseas; you live in a rental property overseas, you do not own an Australian residence, and your visit to Australia the following financial year was short and temporary. Based on the facts of your case, the Commissioner accepts that you do not reside in Australia according to the ordinary meaning of the word; therefore, you are not a resident of Australia for taxation purposes. | 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'. Generally speaking, persons leaving Australia would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile by choice or by operation of law. In this regard, paragraph 21 of Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) states that: In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice. In your case your domicile of origin is Australia. In your case you have a working visa which is not sufficient evidence of an intention to acquire a new domicile of choice. | Detailed Reasoning - Permanent place of abode: 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. The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that "a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression." In your case you intend to stay overseas indefinitely. You are residing in a long-term rental property overseas. Your spouse accompanies you. You have purchased a vehicle for your use overseas. You have opened a bank account overseas and joined a number of sporting clubs. Based on these facts, it is therefore considered that you have established a permanent place of abode in the overseas country. | 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. You were physically present in Australia until you departed. Therefore for the year ended 30 June 2015 your presence in Australia exceeded 183 days. However, the Commissioner is satisfied that your usual place of abode is now outside of Australia. 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 Sector Superannuation scheme or the Commonwealth Service Superannuation scheme, 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 are not a resident under this test. | Detailed Reasoning - Your residency status: Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly from the day you departed Australia you are not 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.