Private ruling: residency
Published: October 2011
Ruling period: Year ended 30 June 2002 | Year ended 30 June 2003 | Year ended 30 June 2004 | Year ended 30 June 2005 | Year ended 30 June 2006 | Year ended 30 June 2006 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011
Date scheme commenced: 1 July 2001

Ruling: Question and answer: | 1. Were you a resident of Australia for taxation purposes from date A to date B? | No. | 2. Are you a resident of Australia for taxation purposes from when you returned to Australia? | Yes.


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. Subsection 995-1(1) of the ITAA 1997 defines an Australian resident as a person who is a resident of Australia for the purpose 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 test · the 183 day test · the superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650: Residency - Permanent Place of Abode outside Australia . The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. You returned to country A for a number of years to care for your sick relative. You were therefore not residing in Australia according to ordinary concepts and you were not a resident of Australia for tax purposes according to this test. After you returned to Australia you began to reside in Australia according to ordinary concepts and became a resident of Australia for tax purposes. | Detailed Reasoning - The domicile test: If a person has their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Domicile There are essentially 3 types of domicile that an individual can have: · the domicile of origin; · the domicile of choice; and · The domicile of dependency. Basically, the domicile of origin of an individual is where the individual was born. 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. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. You were born in Country A and you came to Australia a number of years ago, therefore, your domicile of choice is Australia. As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. 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. In your case: · you left Australia to care for your relative for a number of years · you lived with your sibling for the years you were in Country A caring for your relative. The Commissioner is satisfied that you established a permanent place of abode outside Australia while you were in Country A therefore you are not a resident under this test. | Detailed Reasoning - The 183-day test: When 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. You were not in Australia for more than 183 days during any financial year since leaving Australia and therefore you are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not and have never been a commonwealth government employee and therefore you are not able to contribute to the abovementioned superannuation schemes. | Detailed Reasoning - Your residency status: You were a non-resident of Australia for taxation purposes from the date you left Australia until you returned. You are required to declare income derived in Australia in your Australian tax return during this period. You are a resident of Australia for taxation purposes from the date you returned to Australia. You are required to declare any income derived both in and outside Australia in your Australian tax return from this date.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | You are a citizen of country A and Australia. | You arrived in Australia a few years ago to reside here permanently. | You returned to country A to care for your sick relative a few years ago. | Your relative recovered and you returned to Australia. | You have a house in Australia which you rented out while you were in country A caring for your relative. | Your only assets in Australia are your home and a bank account. | You have never been a Commonwealth of Australia Government employee. | You returned to live permanently in Australia.