Private ruling: Residency
Published: April 2015
Ruling period: 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 2014

Ruling: Question and answer | Are you a resident of Australia for tax purposes? | No.

Relevant facts and circumstances: You are a citizen of both country X and Australia and hold an Australian passport. You left Australia to work overseas over ten years ago. You left with the intention of not returning to Australia to live and have maintained that intention. You have an estranged spouse and adult children who live in Australia. You lead a separate life from your spouse and children but choose to remain married. You and your spouse jointly own investments in Australia. When visiting Australia, you take up accommodation with your spouse and children for the convenience of spending time with your children. You have been employed on an ongoing basis in country Y for several years and intend to continue working in country Y indefinitely. In country Y, you live in employer provided accommodation which is for your own exclusive use. You have bank accounts in country Y to fund your living requirements. You have bank accounts in Australia. You transfer funds to your spouses' bank account in order to fund your children's education and living needs and to allow your spouse to attend to your Australian investments. Neither you nor your spouse is an employee of the Australian Commonwealth government.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1)

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 (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, and • the superannuation test. 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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | 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'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and all the circumstances of the taxpayer are taken into account in arriving at a decision. In your case, you: • left Australia over ten years ago with the intention of living and working overseas indefinitely; • have been working in country Y for several years and intend to continue working in country Y indefinitely; • live in accommodation which is for your own exclusive use; and • are estranged from your Australian spouse and only return to Australia occasionally. Based on the information provided, it is considered that you are not residing in Australia. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, your domicile of origin is country X and you changed your domicile to Australia when you became a citizen. At present, there is no evidence to show that you have established a new domicile in any other country. Therefore, your domicile is still Australia. | Detailed Reasoning - Permanent place of abode: It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. The Commissioner's view on what constitutes a permanent place of abode is contained in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650). Clearly, the longer an individual stays in any one particular place, the more permanent in nature is likely to be the stay in that place of abode. An individual's intention regarding the duration of the overseas stay and the length of the actual stay are significant factors in deciding whether they have set up a permanent place of abode. A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller. In your case, as previously mentioned, you: • left Australia over ten years ago with the intention of living and working overseas indefinitely; • have been working in country Y for several years and intend to continue working in country Y indefinitely; and • live in accommodation which is for your own exclusive use. Based on the information provided, the Commissioner is satisfied that your permanent place of abode is outside of Australia. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year, unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You will not be a resident under this test as you will not spend more than 183 days in Australia in an income year while you are based overseas. | Detailed Reasoning - The superannuation test: A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees. You are not a resident under this test as neither you nor your spouse is employed by the Australian Commonwealth government. | Summary: You do not meet any of the tests of residency and are not a resident of Australia for tax purposes for the relevant income years.