Private ruling: Residency
Date of advice: 2 May 2018
Published: July 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

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

Relevant facts and circumstances: You are an Australian citizen and your country of origin is Australia. Your spouse is a foreign citizen and an Australian permanent resident. Your children are Australian citizens. Your family have been Country X permanent residents since 20XX. Your family lived in Australia prior to 20XX. You have lived in Country X since 20XX. Your family lived in Country X between 20XX and 20XX. Your children attended school in Country X for 6 years but are returning to Australia with your spouse in 20XX for schooling. Your spouse intends to be in Australia until the children complete school and will then return to Country X. You have worked for the same employer in Country X since 20XX and intend to work in Country X until retirement. You do not travel to Australia for work. You and your family have leased a house for the last eight years in Country X. You recently purchased a house in Country X to live in and have household effects, a driver’s licence and bank accounts in Country X. You had an investment property in Country X which was sold in 20XX. You have maintained a holiday house in Australia for the last eight years which your family are currently living in. Your assets in Australia are one car and two bank accounts, and your only Australian sourced income is bank interest. You are not employed in Australia. You have social and sporting connections in Country X but not in Australia. You and your spouse are not Commonwealth Government of Australia employees for superannuation purposes. You have advised the Australian Electoral Commission to remove your name from the electoral roll. You have advised the Australian financial institutions with which you have bank accounts that you are a non-resident. On Australian immigration outgoing passenger cards you state that you are a visitor.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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 ● superannuation test. If any one of the tests is met, an individual will be a resident of Australia for taxation purposes. The primary test for deciding the residency status of an 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 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 Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year: ● physical presence in Australia; ● nationality; ● history of residence and movements; ● habits and 'mode of life' ● frequency, regularity and duration of visits to Australia; ● purpose of visits to or absences from Australia; ● family and business ties with Australia compare to the foreign country concerned; and ● maintenance of a place of abode. The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive. The question of whether an individual resides in a particular country is a question of fact and degree and not of law. Taxation Ruling IT 2650 Income Tax: Residency – permanent place of abode outside Australia emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. In your case you have been living and working in Country X since 20XX. Although your family have relocated back to Australia this does not affect your residency as you have remained in Country X. You are not considered to be a resident of Australia under the resides test. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be considered 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 prove an intention to make his or her home indefinitely in that country. 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. You are an Australian citizen and your domicile is Australia. You are a permanent resident of Country X and have set up a permanent place of abode in Country X since 20XX by renting a house and now purchasing a property to live in. Based on the facts you have provided we consider that you will not be a resident of Australia under the domicile test between 1 July 20XX and 30 June 20XX. | Detailed Reasoning - The 183-day 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. Your intention is to reside in Country X and that will be your usual place of abode. You do not meet the 183 days test because you have established a permanent place of abode in Country X and have been present in Australia for less than 183 days in the income year ending 30 June 20XX. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is: ● a member of the superannuation scheme established by deed under the Superannuation Act 1990; or ● an eligible employee for the purposes of the Superannuation Act 1976; or ● the spouse, or a child under 16, of a person covered by the above. You and your spouse are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test. | Detailed Reasoning - Your residency status: As you do not satisfy any of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you will not be a resident of Australia for income tax purposes for the year ended 30 June 20XX.