Private ruling: Residency
Published: April 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2011

Ruling: Question and Answer | Are you an Australian resident for income tax purposes? | No.

Relevant facts and circumstances: Your country of origin is Country A. You are a citizen of Australia. You departed Australia in early 20XX. Your intention when you left was to be with your partner. You met your partner in 200Y. You have a property in Australia which you rent. You are a professional consultant, and work as a contractor. You rent an apartment in Country C. This was originally a two-year contract, and there is one year remaining on this contract. Your partner stays over at this apartment, but you do not live together on a fulltime basis. You return to Australia once a year to check your rental property. You have returned to Australia several times since you moved to Country C. You look for local work contracts in Country C. You do not look for work contracts in Australia. From early - mid 20XX you obtained a tourist visa, and travelled within Country C. You worked in Country C from mid 20XX - mid 20ZZ. You obtained a sponsored work visa for Country D for this period. From mid 20ZZ until now you have not been working. You are marketing your services. You have obtained tourist visas for this time. Several work contracts have fallen through during this time. You have had numerous tourist visas for Country C. They are multiple entry visas. Since mid 20ZZ you have been staying in the one place. You have not applied for permanent residency in Country C due to restrictions on applying for permanent residency. However, you intend to do so when you become eligible. Your assets in Australia include investments, for example property and some shares and bank accounts. You sold your car a while ago. Your assets in Country C include your rental property. You have never held a position with the Commonwealth Government of Australia.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes - general: 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. These tests are: · the resides test, · the domicile (and permanent place of abode 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. The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered. If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. 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'. Taxation Ruling IT 2650 - Income tax: residency - permanent place of abode outside Australia adopts principles and guidelines which can also be used for individuals who intend to reside overseas indefinitely. It states in paragraph 19: The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes. In your case, you have resided in Country C since early 20XX. You have returned to Australia several times for short periods. Your length of physical absence from Australia and the surrounding circumstances are not consistent with residing in Australia. You have taken out a rental contract in Country C, you have held a year-long work contract, and you are currently looking for further contracts. You do not intend to return to Australia apart from an annual visit to check your rental property. Accordingly, you are not residing in Australia and, therefore, are not a resident of Australia under the resides test during the income years in question. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia. A person's domicile is generally their country of birth. This is known as a person's domicile of origin. A person is able to change their domicile, which is known as a domicile of choice. We consider that your domicile became Australia when you became an Australian citizen. We do not consider that your domicile of choice has changed to Country C. IT 2650 states that a working visa, even for a substantial period of time, such as two years would not be sufficient evidence of an intention to acquire a new domicile of choice. Therefore we need to consider whether you have established a permanent place of abode in Country C. 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. Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include: · the intended and actual length of the taxpayer's stay in the overseas country · whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time · whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia · whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence · the duration and continuity of the taxpayer's presence in the overseas country and · In your case: · you have resided in Country C since early 20XX. Your intention when you moved to Country C was to be with your partner. · you held a year-long contract (which was subsequently extended by one month) between mid 20XX and mid 20ZZ. Since then you have not been working. You have remained in the same place. · you do not look for work in Australia. · you intend to only return to Australia once a year to check your rental property. · you took out a two-year rental contract in Country C. There is one year remaining on this contract. Your partner stays over sometimes, but you do not live together on a permanent basis. · you have a property in Australia, which you rent out. This is currently tenanted. · you currently hold a multiple-entry tourist visa. You have held several tourist visas. These visas permit you to stay in the country for either 90 or 30 days from the date of entry. Your intention is to obtain another work visa, and eventually, to apply for Permanent Residency in Country C. Based on the above information the Commissioner is satisfied that you have established a permanent place of abode overseas. You have entered into a rental contract, and intend to stay in Country C to be with your partner. You have held one work contract in the past, but you have not been working since mid 20ZZ. However, you are actively looking for work in Country C and your intention is to obtain another work visa. In the future your intention is to apply for permanent residency in Country C when you become eligible. Accordingly, you are a non-resident of Australia for taxation purposes under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days (i.e. half of the income year) during an income year, the person will be a resident of Australia for taxation purposes 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. Your visits to Australia in the relevant and subsequent income years (to date) total to less than 183 days, You will not be a resident of Australia for taxation purposes under this test because you were not in Australia for more than 183 days in the relevant income year, and you will not be in Australia for more than 183 days in the subsequent income year. In future income years you intend to only return to Australia once a year to check your rental properties for a similar time period to the years above. Therefore you will not be a resident under the 183 day test. | Detailed Reasoning - The superannuation test: Under this test, an individual will be considered a resident of Australia for taxation purposes if: 1. they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 , 2. they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976 , or 3. they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS. In your case, you have never held a position with the Commonwealth Government of Australia. Accordingly, you are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - Conclusion - your residency status: Based on the facts in this ruling, you do not meet any of the residency tests in subsection 6(1) of the ITAA 1936. Therefore you are a non-resident of Australia for the income years in question.