Private ruling: Residency
Date of advice: 4 October 2017
Published: February 2018
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 2016

Ruling: Q1: Are you a resident of Australia for tax purposes? | A1: Yes

Relevant facts and circumstances: You are an Australian citizen who is married. You and your spouse departed Australia in 2016 to work in a foreign country assisting with the construction of a building for a registered charity. You hold a visa which allows you to work in the foreign country until early 2019. This visa permits you to work but not to access public funds. Your board and lodgings are provided by the charity. Your work is unpaid. Your temporary accommodation is a furnished mobile home which will be dismantled at the conclusion of the construction project. You do not own a home in Australia. You have retained several Australian bank accounts. Your personal effects remain in Australia at your family’s house. You have retained a mobile phone plan with an Australian provider. Your income is derived from investments. You are not paid for your work. You have retained your enrolment with the Australian Electoral Commission. You retain your Medicare card and have not asked to be removed from their records. On departure you marked your departure card as “Australian resident departing temporarily”. Neither you nor your spouse is a Commonwealth Government employee for superannuation purposes. Immigration data shows that you were onshore for XX days in the 2016/2017 income year, XX days in the 2015/2016 year and XX days in the 2014/2015 year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 6(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, and ● the superannuation test. 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 considered to be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - Resides 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. The Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year: ● Physical presence in Australia; ● Nationality; ● History of residence and movements; ● Habits and ‘mode of life’ ● Frequency, regularity and duration of visits to Australia; ● Purpose of visits to or absences from Australia; ● Family and business ties with Australia compared to the foreign country concerned; and ● Maintenance of a 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. Based on all the facts, your behaviour is consistent with not residing in Australia after the specified date. | Detailed Reasoning - The domicile test: Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. | Detailed Reasoning - Domicile: “Domicile” is a legal concept to be determined according to the Domicile Act 1982 and common law rules. A person’s domicile is in their country of origin unless they acquire a different domicile of choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice. In your case, you are a citizen of the Australia. You have left Australia and have chosen to live temporarily in the foreign country in a temporary accommodation and have every intention of returning to Australia upon completion of the current construction project. Your foreign country visa only allows temporary permission to work in that country. You have not abandoned your domicile in Australia and acquired a domicile of choice in the foreign country. In order to show that a new domicile of choice in a country outside Australia has been adopted a 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. Your arrangements are consistent with a person who has not established a domicile of choice outside Australia. Your visa is not a migration visa, your living arrangements demonstrate no intention to make a new home outside Australia and you have maintained strong links to Australia. | Detailed Reasoning - Permanent place of abode: A person’s ‘permanent place of abode’ is a question of fact to be determined in the light of all the circumstances of each case. ( Applegate v. Federal Commissioner of Taxation 78 ATC 4051; 8 ATR 372 ( Applegate )) In Applegate , the court found that ‘permanent’ does not mean everlasting or forever but it is to be contrasted with temporary or transitory. The courts have considered ‘place of abode’ to refer to a person’s residence, where he lives with his family and sleeps at night. Taxation Ruling IT 2650 Income Tax: Residency – Permanent place of abode outside Australia (IT 2650) provides a number factors which are used by the Commissioner in reaching a satisfaction as to an individual’s permanent place of abode. These factors include: (a) the intended and actual length of the individual’s stay in the overseas country; (b) any intention either to return to Australia at some definite point in time or to travel to another country; (c) the intended and actual length of the individual’s stay in the overseas country; (d) any intention either to return to Australia at some definite point in time or to travel to another country; (e) the establishment of a home outside Australia; (f) the abandonment of any residence or place of abode the individual may have had in Australia; (g) the duration and continuity of the individual’s presence in the overseas country; and (h) the durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments, place of education of the taxpayer’s children, family ties. Paragraph 24 of IT 2650 states that the weight to be given to each factor will vary with individual circumstances of each case and no single factor is conclusive. Greater weight should be given to factors (c), (e) and (f) than to the remaining factors. Based on all the facts, the Commissioner is not satisfied you have a permanent place of abode outside Australia. Therefore you are a resident of Australia under this test. | Detailed Reasoning - The 183 days 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. In your circumstances your travel to Australia is limited to relatively brief visits. Immigration data shows that you were onshore for only XX days in the 2016/2017 income year. Accordingly, 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 (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 contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. You are not a resident under this test. | Detailed Reasoning - Residency status: As you satisfy one of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a resident of Australia for income tax purposes.