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

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes? | Yes

Relevant facts and circumstances: You are a citizen of both Australia and Country A. You were born in Australia. You left Australia to work overseas. You did not need a visa as you have a Country A passport. You had a contract overseas which was effectively an employment bond You worked on a vessel that operated in a number of locations without having a specific home port. You did not stay in any country for any length of time. While working overseas you returned to Australia after some years for a short holiday and then returned for a short holiday some time later. You have now returned to Australia to live on a permanent basis having bought a house and are currently studying.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection6(1). | Income Tax Assessment Act 1997 Section 6-5. | Income Tax assessment Act 1997. Subsection 995-1(1)

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (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: 1. The resides test 2. The domicile test 3. The 183 day test 4. The superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650. | Detailed Reasoning - The resides test: 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'. During the period in question you did not have a settled or usual abode in Australia and were not a resident under the resides test. | Detailed Reasoning - The domicile test: 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. 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. While you obtained citizenship of Country A you did not do this to make your home in Country A. You were working on a vessel that travelled around the world and that had no set port at which it was based. There is no evidence of an intention to make your home indefinitely in another country. Therefore, you maintained your Australian domicile. | 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. In your case, you lived and worked on a vessel full time. The vessel was a foreign flagged vessel and travelled in international waters and visited locations around the world on a year round basis. Therefore the commissioner is not satisfied that you have a permanent place of abode outside of Australia. As you have maintained your Australian domicile and you have not satisfied the Commissioner that you have a permanent place of abode outside of Australia, you are a resident of Australia for tax purposes under this test. | Detailed Reasoning - Your residency status: As you are a resident of Australia under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936 there is no need to examine the remaining tests. You are an Australian resident for tax purposes.