Private ruling: residency
Published: September 2011
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

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

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You were employed by company 1 based in foreign country A. Whilst working for the company you would be stationed for a period with a break between stints. During this time you returned to Australia to visit friends and relatives, though not on every occasion. You left company 1 to join company 2, also based in foreign country A, to provide services to an international organisation based in foreign country B. You were employed to provide similar services for company 3, with whom you remain employed. You provide services to private enterprise who are engaged by political organisations to assist in the operations in foreign country B. You have had places of abode in foreign country B. Due to the nature of your work, you have had to move occasionally within foreign country B. Each time you had a place of abode you would return to it each night following your daily duties. Your current employer, company 3, provides their contractors with accommodation. Your current address in foreign country B is effectively a mini apartment located in a hotel. A contractor engaged with company 3 is provided with their own room during their contract in this establishment. You have no relationship with the owner of the property. This is all done by company 3. Your employer is responsible for payment of the accommodation for you and all contractors of company 3. You have resided at the hotel since you commenced employment with company 3. You have not had to move places of abode since being employed with company 3. Whilst with company 1, you were required to be in engaged in activities in other locations within foreign country B, however the central address was always back in one location. You currently pay no tax in foreign country B and do not know if you are liable for tax there on your income. You will continue to work in foreign country B for at least the next few years, the length of your contract. However, you are currently undecided on your next location of employment in the event your contract with company 3 comes to an end. Your only assets overseas are personal belongings (no major assets). You have no sporting ties in foreign country B. You lived in Australia in a dwelling. You have owned this house for several years. It is currently being repaired with the aim of renting it. Since you and your spouse separated, you have not had a permanent place of abode in Australia. You maintain an Australian postal address, but you do not reside at one central place during your breaks from employment. You have one child who lives permanently with their parent in Australia. You own a half share in another dwelling. This is where your spouse and child reside. Besides paying repayments as part of a separation agreement you have no other connection to this dwelling. For the income year, you were in Australia for less than 183 days. You have no sporting ties in Australia. You are not a member of a Commonwealth Superannuation Fund. You are more than 16 years of age. Relevant legislation provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) Income Tax Assessment Act 1936 Subsection 6(1)


Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. 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 . 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 satisfy 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'. Taxation Ruling IT 2650 provides guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay. The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states: The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes. In your case, you have been living and working in foreign country B. You have had places of abode in foreign country B. Each time you had a place of abode you would return to it each night following your daily duties. Your former dwelling in Australia will be rented. You do not reside at one central place in Australia during the time you are in Australia. Accordingly, it is considered that you are residing in foreign country B and, therefore, are not a resident of Australia under the resides test. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in 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 an individual's domicile of choice has been adopted, the person must be able prove an intention to make their or her home indefinitely in that country. In your case, as you are still an Australian citizen while living overseas, your domicile is Australia and remains unchanged. Paragraph 14 of IT 2650 discusses the findings in the court case of F C of T v Applegate (79 ATC 4307). In this case, the Court said that the term "permanent" must be interpreted in the context in which it appears. It acknowledged 'that in its context in the "resident" definition a permanent place of abode does not have to be "everlasting" or "forever" … (but) should be contrasted with a temporary or transitory place of abode outside Australia. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there their or her usual place of abode'. They stated further that 'the taxpayer's intention regarding the duration of their stay overseas was only one relevant factor to be taken into account. Of more importance is the nature and quality of use … of a particular place of abode overseas'. Whilst it is acknowledged that you have been living and working in foreign country B for some years (and intend to stay for at least another several more years), it is considered that the hotel accommodation (even if it is more of a mini apartment) is not a permanent place of abode. It is (by its nature) temporary accommodation which is paid for by your employer and hence they are able to move you from this accommodation (particularly in the event of a change of location of your duties) if and when required. As you have an Australian domicile and have not established a permanent place of abode outside Australia, you are a resident of Australia under the domicile test during this period. | Detailed Reasoning - Conclusion: As you are a resident of Australia under the domicile test, you are therefore an Australian resident for taxation purposes as defined in subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936. As you have passed one of the residency tests, it is not necessary to consider the remaining tests (183-day and superannuation).

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.