Private ruling: Residency
Date of advice: 14 March 2017
Published: August 2017
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2017 | Year ending 30 June 2016 | Year ending 30 June 2015 | The scheme will commence on: | 1 July 2014

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

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. You are an Australian citizen and country A is your country of origin. You left Australia in # to live and work overseas. Prior to leaving Australia you lived in a home which you owned in Australia. You sold your home after you left Australia. You separated from your spouse in mid-#. You gave your household effects to your family, friends and ex-spouse. Your employer is based in an overseas country. Your job requires you to travel to various overseas countries on a continuous basis. You spent the majority of your first year in country B and country C and the second year in Country C and country D. You rented an apartment in country B for 1 year and ended up breaking the lease as the nature of your work and extensive travel meant that you stayed in hotel accommodation provided by your employer. You have recently registered a country C company which will entitle you to apply for a work permit and you can then apply for permanent residence. You have signed a freehold lease on a property in country C. You return to Australia to visit your child and for work purposes. In 2014/15 and 2015/16 you spent less than 185 days in Australia. When you return to Australia you stay with your parents. You do not have a job in Australia. You receive income from your rental property in Australia. You have a bank account in Australia. You are taking steps toward becoming a country C resident. You have removed your name from the Australian electoral role. You have not advised Medicare that you are a non-resident. You do not have any investments with Australian companies. You have not advised the Australian banks you have accounts with that you are a non-resident. You are not eligible to contribute to the relevant commonwealth super 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. 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 ● Commonwealth superannuation fund test. The primary test for deciding the residency status of each 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 outcomes of several Administrative Appeals Tribunal (AAT) cases 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. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and "mode of life" (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) 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. Your job requires you to travel to various overseas countries on a continuous basis. You rented an apartment in country C for 1 year and ended up breaking the lease as the nature of your work and extensive travel meant that you stayed in hotel accommodation provided by your employer. You separated from your spouse in #. You sold your home when you left Australia in #. You gave your household effects to your family, friends and ex-spouse. You have recently registered a country C company which will entitle you to apply for a work permit and you can then apply for permanent residence. You have signed a freehold lease on a property in country C on #. Your employer is based in an overseas country. You return to Australia to visit your child and for work purposes. In 2014/15, 2015/16 you spent less than 185 days in Australia. When you return to Australia you stay with your parents. You were not residing in Australia according to ordinary concepts due to your ongoing employment, living arrangements and intention to remain living and working overseas indefinitely. | 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. Your domicile of origin is country A. The Commissioner is satisfied that you have a permanent place of abode outside Australia when you are travelling overseas for work for the following reasons: You are taking steps to become a country C citizen. Your work has not allowed you to remain in one city or country for an extended period of time, however, it is clear that you would settle in country C if your employment did not require the extensive travel. You separated from your spouse in #. You return to Australia for short visits to see your child and for work purposes. You do not have a job or a home in Australia. You have signed a freehold lease on a property in country C. You are not a resident under this test. | 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. You were not in Australia more than 183 days in the 2015, 2016 (and expect the same to apply from 2017 onwards) years of income. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You are not eligible to contribute to the relevant Commonwealth superannuation funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes, provided that the facts of this ruling apply in the 2015 - 2018 income years.