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

Ruling: Q1: Are you an Australian resident for taxation purposes? | A1: No.

Relevant facts and circumstances: The applicant has applied for a private ruling for their residency status during the period of 1 July 2013 to 30 June 2017. · You are an Australian citizen. · You are single with no dependents. · You departed Australia for overseas. · You moved overseas on temporary visas/entry permits that allowed you to remain overseas until you were granted a work visa. · You will continually renew your work visa to stay overseas due to you only being able to apply for permanent residency after residing overseas in that country for a certain period. · You have commenced full time employment. · You intend to stay overseas permanently. · You have returned to Australia since signing your employment contract overseas to visit family and friends and finalise family affairs. · You will return to Australia for a maximum of five days to attend a function. · You were initially residing with family overseas but have now rented an apartment where you're living by yourself. · You have moved most of your household effects overseas and the rest have either been given away or sold. · You have an Australian bank account. · You have bank accounts overseas. · You do not own property in Australia. · You are receiving income from Australian sources through your investments. · You are in the process of transferring your investments overseas. · You do not have a job in Australia to return to when your visa expires. · You do not have any sporting or community connections with Australia or overseas. · You have not held a position with the Australian Commonwealth Government and you are over the age of 16. · You have not had your name removed from the electoral roll. · You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. · You have suspended your Private Health membership. · You have not lodged a tax return overseas. · You stated on your outgoing passenger card that you were leaving the country to reside overseas for work.

Relevant legislative provisions: Section 6(1) of the Income Tax Assessment Act 1936.

Reasons for decision: Detailed Reasoning - Residency: 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: · 'resides' test (ordinary concepts test) · domicile and permanent place of abode test; · 183 day test; and · Commonwealth superannuation fund 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 (ordinary concepts) 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 it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'. In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 (Miller's case) at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word "reside" The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant (Case 5/2013 (2003) AATA 394, paragraph 49): (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 residency status of individuals who enter Australia , and Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia. To determine whether or not you were residing in Australia for taxation purposes during the years in question, it is necessary for us to examine each of these factors in the context of your circumstances. No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances. | Detailed Reasoning - (i) Physical presence in Australia: A person does not necessarily cease to be a resident of a particular place just because he or she is physically absent. The test is whether the person has retained a continuity of association with the place , together with an intention to return to that place and an attitude that the place remains home ( Joachim v Federal Commissioner of Taxation 2002 ATC 2088, at 2090). We consider you will not maintain a continuity with Australia during the financial years ended 30 June 2014 to 30 June 2017 because: · You moved overseas on temporary visas/entry permits that allowed you to remain overseas until you were granted a work visa. · You will continually renew your work visa to stay overseas due to you only being able to apply for permanent residency after residing overseas in that country for a certain period. · You intend to reside permanently overseas. · You were initially residing with family overseas but have now rented an apartment where you're living by yourself. · You moved most of your household effects overseas and the rest have either been given away or sold. · You will be physically present in Australia for less than six months of the income year. · You do not own property in Australia. · You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. · You have suspended your Private Health membership. We consider the above facts indicate that you do not have an intention to return to Australia or an attitude that Australia still remains your home. | Detailed Reasoning - (ii) Nationality: The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case. You are an Australian citizen. We do not consider this issue places any weight one way or the other on any determination as to whether or not you were a resident of Australia for taxation purposes under the resides test in the years ended 30 June 2014 to 30 June 2017. | Detailed Reasoning - (iii) History of residence: In Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 (Iyengar's case), the Tribunal noted that both past and subsequent history of a person's residence may be relevant in determining whether that person is ordinarily resident (for taxation purposes) in a country in a particular income year. Prior to moving for overseas, you resided in Australia in rented accommodation. During this time you had secondments overseas firstly for two months and then secondly for seven months. You also left Australia for overseas as you were fairly certain that you wanted to relocate overseas. You lived overseas until you decided to travel. When you finished travelling you returned to Australia where you stayed until moving overseas. When you initially arrived overseas, you were residing with family but have now rented an apartment where you're living by yourself. You have commenced full time employment overseas and moved most of your household effects overseas with the remainder either been given away or sold. You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted and suspended your Private Health membership. We consider the above facts to indicate that you do not have an intention to return to Australia and that you went overseas to live permanently. | Detailed Reasoning - (iv) Habits and "mode of life": The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. "Where the day to day behaviour of individuals, considered over time, is relatively similar to their behaviour before entering Australia, they are likely to be regarded as residing here. Even when their behaviour over time is different from their behaviour before entering Australia, they are likely to be regarded as residing here, when the facts of their presence indicate a routine establishing they are living in Australia." (TR 98/17). You have stated that you have a bank account and have rented an apartment overseas and that you have commenced full time work. You have stated you advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. You have suspended your Private Health membership and you do not have any sporting or community connections with Australia. Based on the information you have provided, we do not consider anything about your habits and mode of life to be inconsistent with you being a foreign resident of Australia for taxation purposes. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: In Lysaght v Inland Revenue Commissioners (1928) 13 TC 511 the Court noted that the mere fact that visits to a country are of short duration does not of itself exclude residence in that country. Since moving overseas, you have or will return to Australia as detailed below: · To visit family and friends and help your family with a business matter. · To attend a function. When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar's case also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not exclude an individual from being a resident in the country visited. Considering the above, we do not consider the relatively short duration of your return trips to Australia is sufficient to preclude you from being considered a resident of Australia for taxation purposes in each of those years. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: The details of your return trips to Australia from overseas are discussed above. As stated, we do not consider the brevity of these trips precludes you from being considered a resident of Australia for taxation purposes. With regard to the purpose of your absence from Australia, we consider it to have been to reside permanently, as opposed to any purpose related to work. We have formed this view because: · You will continually renew your work visa to stay overseas due to you only being able to apply for permanent residency after residing overseas in that country for a certain period. · You have commenced full time employment. · You intend to stay overseas permanently. · You were initially residing with family overseas but have now rented an apartment where you're living by yourself. · You have moved most of your household effects overseas and the rest have either been given away or sold. · You do not own property in Australia. · You have a bank account overseas, · You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. · You are in the process of transferring your investments overseas. · You have suspended your Private Health membership. | Detailed Reasoning - (vii) Family and business ties to Australia and the overseas country or countries: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. Family You moved overseas to reside permanently. You were residing with family overseas until you started renting an apartment to live by yourself. You have returned to Australia, to visit family and friends and help your family complete the sale of their business. Business or economic You commenced full time employment overseas. Assets · You have bank accounts overseas. · You have investments in Australia which you are in the process of transferring overseas. · You have maintained your Australian bank account. · Your personal effects such as tv, clothes etc have been either moved overseas or been given away or sold. Based on the evidence you have provided, you have no business ties as such to either Australia or overseas. However, we consider that you have maintained family ties with Australia since leaving for overseas due to you returning to Australia to visit family and help your family complete the sale of their business. | Detailed Reasoning - (viii) Maintenance of Place of abode: The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. You did not own any residential property in Australia prior to moving overseas, therefore it cannot be said you maintained a place of abode in Australia during the financial years in question. Whilst overseas, you have rented an apartment which the lease documents you have supplied clearly identify you as the tenant and as the responsible entity for the property. We therefore consider you to be responsible for the maintenance of this place of abode. Considering the above facts, we consider that you will be maintaining a place of abode overseas. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. You have settled into life overseas and have been spending your time working. There are several factors outlined above which indicate that you have ceased to be a resident of Australia. Specifically; · You intend to reside overseas permanently. · You will continually renew your work visa to stay overseas due to you only being able to apply for permanent residency after residing overseas in that country for a certain period. · You have commenced full time employment. · You have moved most of your household effects overseas and the remaining effects have either been given away or sold. · You were initially residing with family overseas but have now rented an apartment where you're living by yourself. · You have moved most of your household effects overseas and the remaining effects have either been given away or sold. · You do not own property in Australia. · You have bank accounts overseas. · You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. · You are in the process of transferring your investments overseas. · You have suspended your Private Health membership. · You will be physically present in Australia for less than 6 months in the financial year. · You have a place overseas that you consider to be your home. · You do not plan to visit Australia in extended periods. Based on a consideration of all of the factors outlined above you are a non-resident of Australia according to ordinary concepts as you have not maintained a continuity of association with Australia for the relevant period. | Detailed Reasoning - Other residency tests: Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the 183 day test, superannuation fund test and domicile and permanent place of abode tests. | Detailed Reasoning - Domicile and permanent place of abode: 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. IT 2650 states that: Persons leaving Australia temporarily would generally be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. 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 e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice. Application to the your circumstances You are an Australia citizen. As you have an Australian domicile you will be a resident of Australia unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | Detailed Reasoning - Permanent place of abode: 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. IT 2650 sets out a number of factors established by Court and Tribunal decisions which assist in determining a taxpayer's permanent place of abode; i. the intended and actual length of the taxpayer's stay in the overseas country; ii. 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; iii. 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; iv. whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; v. the duration and continuity of the taxpayer's presence in the overseas country; and vi. durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. As with the factors under the resides test not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - Consideration of these factors: · You intend to remain overseas permanently. · You will continually renew your work visa to stay overseas due to you only being able to apply for permanent residency after residing overseas in that country for a certain period. · You have been living with family initially overseas and have now rented your own apartment to live in. · Prior to moving to overseas you lived in a rented apartment. You have either moved most of your personal effects overseas with the remaining effects being given away or sold. · You will leave overseas to return to Australia to attend a function. · You have an overseas bank account. · You have advised your Australian financial institutions with whom you have investments with you are a foreign resident so that non-resident withholding tax can be deducted. · You are in the process of transferring your investments overseas. · You have suspended your Private Health membership. · You do not have any sporting or community connections with either Australia · You stated on your outgoing passenger card that you were leaving the country to reside overseas for work. The Commissioner is satisfied that you have established a permanent place of abode outside of Australia. You are a not a resident of Australia under the domicile test. | Detailed Reasoning - 183 day and superannuation fund tests: 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. Superannuation funds tests 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. As you were not in Australia for a period of 183 days during the relevant income year this test is not relevant to your circumstances. Equally, as you have never been an employee of the Australian government and do not have a spouse, the superannuation test does not apply to your circumstances. | Detailed Reasoning - Conclusion: You are a not considered to be a resident of Australia under the resides, domicile, 183 day and superannuation fund tests and are therefore a non-resident.