Private ruling: Residency
Published: April 2015
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You are an Australian citizen. You left Australia to work in Country A on a secondment for your Australian employer. You were offered a full time position at the end of your secondment and it was your intention to live permanently in country A on #. You lived in a house on your own which was provided by your employer for the first 12 months while you were on secondment. When you became a permanent employee (with the country A company) you had to find your own accommodation, so you rented a house with X work colleagues. You accepted a new job (with a different employer) in country B and left country A. You are living in country B on a business visa which allows you to stay there for two years and may be extended. You are employed on a permanent full-time contract with no end date. You pay tax on your income as you are considered a resident in country B. You live in accommodation provided by your employer in country B. The accommodation provides you with your own bedroom, bathroom and office. You share facilities including kitchen and laundry as meals and laundry service are provided to you by the company while you are on site. It is not likely that you will seek other accommodation in country B as you intend to travel internationally during your breaks from work. Your purpose for travelling to country A and country B was and is to work. You do not plan to return to country A while you are working in country B. You sold your car, gave up your lease and sold all your personal effects in country A except for those you have with you in country B. You do not have a position or job being held for you in country A. Your assets in Australia include two savings accounts, a superannuation fund, and some shares which are managed by a family member. Your parent and siblings live in Australia. You have no dependants. You do not have a residential address in Australia. You do not intend to return to Australia to live or work and have removed yourself from the electoral roll. You have never been a Commonwealth Government of Australia employee.

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

Reasons for decision: Detailed Reasoning - Residency: 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • resides test; • domicile and permanent place of abode test; • 183 day test; and • Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | 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 Taxation Ruling TR 98/17 Income Tax: residency status of individuals who enter Australia , and Taxation Ruling IT 2650 Income Tax: residency status of individuals who temporarily live outside Australia. Taxation Ruling TR 98/17 states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here. 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 a citizen of Australia. You left Australia on to work in country A on a 12 month secondment for your Australian employer. You were offered a full time position at the end of your secondment (which you accepted) and it was your intention to live permanently in country A. You lived in a house on your own which was provided by your employer for the first 12 months while you were on secondment. When you became a permanent employee (with the country A company) you had to find your own accommodation, so you rented a house with X work colleagues. You accepted a new job (with a different employer) in country B and left country A. You are living in country B on a business visa which allows you to stay there for two years and may be extended. You do not have a permanent place to live in Australia. You live in accommodation provided by your employer in country B. The accommodation provides you with your own bedroom, bathroom and office. You share facilities including kitchen and laundry as meals and laundry service are provided to you by the company while you are on site. It is not likely that you will seek other accommodation as you intend to travel internationally during your breaks from work. You are employed on a permanent full-time contract with no end date. You have not been physically present in Australia since #. You did not maintain a home in Australia. Based on the facts above you were not residing in Australia according to ordinary concepts from # (when your secondment ended and you accepted a full-time position with your country A employer). | Detailed Reasoning - The domicile test: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. 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. 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. You moved to country A initially on a 12 month secondment with your Australian employer, living in accommodation they provided. At the end of your secondment you accepted a permanent position with your country A employer and had to find your own accommodation. It was your intention to reside in country A permanently until you accepted a new job in country B. You are employed under a permanent full-time contract. You do not intend to return to Australia to live or work and have removed yourself from the electoral roll. You do not have a permanent place to live in Australia. Based on these facts, the Commissioner is satisfied that you have established a permanent place of abode overseas. In your case, you were living and working in country A for over 12 months and have permanent full-time employment. You moved to country B to take up an employment opportunity and you do not have a place to live in Australia. Therefore, you are not a resident of Australia for tax purposes from #. | 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 not in Australia for more than 183 days from # as you were on secondment with your Australian employer. From # you accepted a permanent position with your country A employer. It is considered that your usual place of abode is outside Australia from this date. You are not a resident under this test from #. | 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 have never been a Commonwealth Government employee. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes from #.