Private ruling: Residency
Published: October 2013
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Your country of origin is Country X, where you were born. You, your spouse and children are Australian citizens. You departed Australia on XXXX. You entered Country Y with a working visa in XXXX and were granted a permanent residency visa in XXXX. You were granted permanent residency in Country X in XXXX. From XXXX you have lived in the following countries: · XXXX - you relocated to Country Y from Australia · XXXX - you relocated to Country X from Country Y · XXXX - you relocated to Country Z from Country X · XXXX - you relocated back to Country X · XXXX - you relocated to Country Y from Country X · XXXX - you relocated to Country X from Country Y Your residency intentions are that you will reside in either Country X or Country Y permanently. Your spouse and children relocated to Australia in XXXX. They stay in Australia for the children's schooling. From the date they arrived back in Australia, they have been returning to live with you in Country X, Country Y and Country Z during school holidays. In Australia, they live in one of your investment properties. You and your spouse jointly own this property. You travel regularly to Australia for work and to visit your spouse and children and usually stay for about several days. Your travelling patterns have been the same for years. Your employer has been providing you with accommodation for each visit. However, after your family relocated to Australia, in order to maintain an effective marriage relationship with your spouse, you stay with your family rather than staying at a hotel each visit. You have purchased a car in Australia for your spouse and children. You formed the intention to make your home indefinitely outside Australia in XXXX. You have no intention of returning to Australia within the next XXXX years. Prior to your departure from Australia, you were living at XXXX. You do not hold a return airline ticket. You are the regional Executive Director for the Asia Pacific region (APAC) and also appointed as the company's director for your company in several countries including Australia. As Australia is a significant market within this region, you regularly travel to Australia regularly for work commitments. Your overseas employer has not provided you with accommodation overseas; however your employer pays you a housing allowance. In Country X you live at XXXX which is a property that you own. You have various assets overseas including: · property · shares · personal belongings · bank accounts · credit cards and · social memberships in Country X. Your Australian assets are: · a residential property which is jointly owned by your spouse, · investment properties from which you derive rental income, and · savings account. You do not have any investments in Australian companies. You have an employment contract of which you have provided a copy. Your contract can be extended. You are in the process of removing your name from the Australian electoral roll. You have advised Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax can be deducted. Your name has been removed from Medicare records since you departed from Australia. You have lodged personal tax returns in Country X. You pay income tax in Country Y on your employment income and on rental income from your investment properties in Country Y. When departing Australia you complete Section D - Visitor or temporary Entrant Departing, on the Australian Immigration Outgoing passenger card. You did not have a capital gains tax event I1 happen because you ceased to be an Australian resident when leaving Australia. You have declared that you are a non-resident on the most recent taxation returns that you have lodged in Australia. You have no social or sporting connections with Australia. In Country X you are an active member of a club were you participate in various social activities. Neither you nor your spouse is or was an employee of the Commonwealth of Australia Government. You are over 16 years of age. Relevant legislation 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: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 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 · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides (ordinary concepts) test: The Courts 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. These are: · 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 to different countries · 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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. You visit Australia regularly for work and family commitments and stay for several days each time. You have been doing this regularly for XXXX years. | Detailed Reasoning - Nationality: You are a citizen of Australia. | Detailed Reasoning - History of residence and movements: Since departing Australia in XXXX you have lived in the following countries: · XXXX - you relocated to Country Y from Australia · XXXX - you relocated to Country X from Country Y · XXXX - you relocated to Country Z from Country X · XXXX - you relocated back to Country X · XXXX - you relocated to Country Y from Country X · XXXX - you relocated to Country X from Country Y | Detailed Reasoning - Habits and "mode of life": The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. You have been living and working in Country X and Country Y since XXXX. You own a flat in Country X as well as property, shares, personal belongings, bank accounts, credit cards and social memberships. You own several investment properties in Australia. You have a savings account in Australia. Your spouse and children returned to Australia in XXXX for the purposes of your children's schooling. They are living in one of your investment properties in Sydney. You and your spouse jointly own this property. Each month, when you return to Australia for work purposes you stay with your family. You are in the process of removing your name from the Australian electoral roll. Your name has been removed from Medicare record since you departed from Australia. You have advised Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax can be deducted. | Detailed Reasoning - Frequency, regularity and duration of visits to Australia: Case law (e.g. Iyengar and Commissioner of Taxation [2011] AATA 856 (30 November 2011)) has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during period of two years and seven months to be residing in Australia. You travel regularly to Australia for work and to visit your spouse and children and usually stay for several days. Your travelling patterns have been the same for XXXX years. | Detailed Reasoning - Purpose of visits to or absences from Australia: You travel to Australia for work commitments as well as to visit your spouse and children. | Detailed Reasoning - Family and business ties to Australia and the overseas country or countries: You are your employer's regional Executive Director for the APAC region and also the company's director for several countries including Australia. As Australia is a significant market within this region, you regularly travel to Australia regularly for work commitments as well as to visit your spouse and children. | Detailed Reasoning - Maintenance of Place of abode: The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. You maintain a place of abode in Australia, where your spouse and children live, and where you live during your frequent visits to Australia. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. Based on a consideration of all of the factors outlined above, it is considered that you have maintained a continuity of association with Australia. Therefore, you are a resident of Australia according to ordinary concepts. | Detailed Reasoning - Conclusion: As you are a resident of Australia under the resides test you have passed one of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes.

Reasons for decision: These reasons for decision accompany the Notice of private ruling.