Private ruling: Residency
Date of advice: 2 October 2017
Published: February 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will you be a resident of Australia for taxation purposes when you move back to Country Y indefinitely? | A1: No.

Relevant facts and circumstances: You were born in Country Y and you are a citizen of Country Y. You and your spouse have been living in Australia since 200X. You and your spouse intend on moving back to Country Y in the 201X income year. You and your spouse will sell your home in Australia. Your spouse is the sole shareholder of a business in Australia. Your spouse intends on selling this business before relocating back to Country Y. The business operates from premises which are owned by a Trust. It is the intention to sell this property prior to your relocation back to Country Y but it will be leased out if it cannot be sold. You and your spouse intend on making two trips a year back to Australia to visit family and friends and these trips will be for a few weeks and will not exceed 183 days. Neither you nor your spouse are eligible to contribute to the PSS or the CSS Commonwealth superannuation funds.

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

Reasons for decision: Summary: 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. Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 from the date you return to Country Y indefinitely.