Private ruling: Residency
Date of advice: 9 December 2016
Published: May 2017
Ruling period: Year ended 30 June 201X | Year ending 30 June 201X
Date scheme commenced: Mid-late 201X

Ruling: Q1: Are you a resident of Australia for taxation purposes for the period you are in Country Y? | A1: Yes

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y in the 201X income year. You went to Country Y on a relevant Visa. The visa is for X years. The visa does not allow you to stay permanently in country Y. You intend on returning to Australia when your visa expires. You went to Country Y for work purposes and to travel. You rent accommodation in Country Y. You are self-employed in Country Y. You have not come back to Australia since leaving. You have rented your home out in Australia. You have shares and a bank account in Australia. You have a bank account in Country Y. You have stored your household affects with your parents. You do not have any dependants. You have not removed your name from the Australian electoral roll. On the outgoing passenger card you ticked for work purposes when leaving Australia. You are not eligible to contribute to the PSS or the CSS Commonwealth super funds.

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 . 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 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. In your case: ● You went to Country Y in the 201X income year for work purposes and to travel. ● You have a X year visa. ● You will return to Australia when your visa expires. ● You do not intend on being outside Australia on a permanent basis. Based on the facts above for the period you are working in Country Y you are a resident of Australia for taxation purposes as you will maintain a continuity of association with Australia. You are a resident under this test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. Your domicile of origin is Australia. 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. The Commissioner is not satisfied that you will set up a permanent place of abode outside Australia for the following reasons: ● You have gone to Country Y for work purposes for X years ● You rent accommodation in Country Y ● You do not intend on being outside Australia on a permanent basis ● Your visa does not allow you to stay permanently in Country Y ● You are renting your home out in Australia for the period you are in Country Y You are not a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period you are in Country Y.