Private ruling: Residency
Published: May 2015
Ruling period: Year ended 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 20XX

Ruling: Question and answer | Are you a resident of Australia for tax purposes? | Yes

Relevant facts and circumstances: You were born in the Country A and are a Country A citizen. You obtained permanent residency in Australia in 199X and you are an Australian citizen. You lived in a house you owned in Australia prior to your departure to Country B You departed for Country B in 20XX. You have a working resident's visa in Country B and you are entitled to stay there permanently. You moved to Country B for permanent employment with Employer A. You intend to reside in Country B for employment purposes but you will eventually return to Australia at an unspecified time in the future for either employment or in retirement. You spend most of your off-work time in Australia. You spend a definite more than 183 days out of Australia, either in Country B or elsewhere, for work purposes. You return to Australia multiple times a year to visit your spouse and child. You have an employer provided house in Country B that is for your sole use. You have a bank account, motor vehicle and household effects in Country B. You have a house in Australia where your spouse and child live. Your spouse has not accompanied you because she/he works in Australia. Your house is fully furnished, you own X cars and a trailer, and you have a bank account in Australia. You do not receive income from Australian sources. You play sport and have social drinks with work colleagues in Country B. Your tax contributions in Country B are dealt with by your employer. You stated 'employment' as your reason for leaving Australia on the Australian Immigration Outgoing passenger card. You have not yet advised the Australian Electoral Commission, Medicare or your health insurance provider, and Australian financial institutions that hold your investments that you are a foreign resident. You are waiting for the outcome of this private ruling before you notify them.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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 (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 for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, 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'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Based on the facts of your case, the Commissioner accepts that you were not residing in Australia according to the ordinary meaning of the word from August 20XX to November 20YY. | Detailed Reasoning - The domicile 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's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. In your case, your domicile of origin was in Country A. Your domicile of choice became Australia when you were granted permanent residency and became an Australian citizen. We consider that you have not made Country B your permanent place of abode because: • Your spouse and child still reside in Australia. • You spend most of your off-work time in Australia visiting your spouse and child. • You own a house your spouse and child reside in, two cars and a trailer, and household effects in Australia. The Commissioner is not satisfied that you have established a permanent place of abode outside Australia therefore you are a resident under this test. | Detailed Reasoning - Your residency status: As you meet the domicile test of residency, you are a resident of Australia for taxation purposes. You are required to declare all your income derived both in and out of Australia in your Australian tax return. | Detailed Reasoning - Ruling restricted to four years: The Commissioner does not generally provide rulings for indefinite periods due to potential changes to the law in the future and also to potential changes to the facts and circumstances of the case. For this reason this ruling has been restricted to the period covered by the four financial years up to the year ended 30 June 2018. However, this does not mean that you are required to apply for a new ruling after four years. In the absence of any change to the legislation or material change to your circumstances, the interpretation of the law as explained in this ruling will continue to apply.