Private ruling: Residency for tax purposes
Published: December 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2014

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

Relevant facts and circumstances: You were born in Country Y you are a citizen of Country Y. The Country Y tax authorities have determined you are a non-resident of Country Y for taxation purposes. You are a permanent resident of Australia. You have been in Australia for a number of years and you currently hold a partners visa. You will commence working for an overseas employer in XXXX You will be contracted through your overseas employer to work for in Country Z. You will enter Country Z on a training visa for the first 6 months of your contract. For the first 6 months of your contract the training visa allows you to remain in Country Z for the 6 months. You have not yet been notified what visa you will enter Country Z on once you commence full-time work. You will not be able to remain permanently in Country Z on the visa that is issued to you. You have signed a 5 year contract with your employer. You will be provided with accommodation during your training period and then will be given an allowance to obtain your own accommodation such as a hotel etc. You will receive 120 days a year leave and you intend on spending 60-90 days in Australia on leave. You have a home in Australia which you share with your spouse and child. You have a property in Country Y which you and your family stay in for about 30 days each year. The property in Country Y is available to you 365 days a year. Your spouse and child will remain in Australia while you are working in Country Z. At this stage no plans have been confirmed for your spouse and child to move overseas with you. You have the following assets in Country Y: • Household affects • Bank account You have the following assets in Australia: • Home jointly owned with your spouse • Household affects • Bank account You have resigned from your job in Australia. Neither you, nor your spouse, are eligible to contribute to the relevant Commonwealth super funds.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6-1. | Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 995.

Reasons for decision: Summary: 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 (TR 98/17). It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. You were born in Country Y and you are a citizen of Country Y. You are a permanent resident of Australia. You will commence work for an overseas employer in XXXX. Your spouse and child will not accompany you to Country Z. There are no plans at this stage for your spouse and child to move overseas with you. You are not able to stay permanently in Country Z while working. You and your spouse have a home in Australia which your spouse and child will remain in while you are working in Country Z. You will spend 60-90 days of your annual leave in Australia with your family. You have a property available to you in Country Y which you and your family spend approximately 30 days a year at. In your case, although you will be physically absent from Australia, there are various factors that indicate that you are still a resident of Australia. These are primarily: • you are a permanent resident of Australia • you are not able to remain permanently in Country Z if you are not working in Country Z • Your spouse and child will remain in your home in Australia Based on the above, you will retain a continuity of association with Australia while you are overseas and are residing in Australia according to the ordinary meaning of the word. In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period. In your case you have obtained work with an overseas employer. Your spouse and child will remain in Australia in your home. In your case you have chosen to accept a job outside Australia in Country Z and you therefore remain a resident of Australia for taxation purposes. 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 Country Y. You have changed your domicile as you are a permanent resident of 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 have set up a permanent place of abode outside Australia for the following reasons: • Your visa only allows you to be in Country Z while you are employed • You have a home in Australia which you return to on a regular basis • Your spouse and child remain in Australia You are a resident under this test. | Detailed Reasoning - Residency status: You are a resident of Australia for taxation purposes for the period you work in Country Z.