Private ruling: Residency
Published: January 2013
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
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 left Australia for Country A for employment reasons. You intended to return to Australia within two years. Due to the Global Financial Crisis your employer required you to continue your employment in Country A. You maintained investments in Australia including at least one bank account. You have recently taken up a private health insurance policy in Australia prior to your return to Australia. Close family members have remained in Australia. You were diagnosed with a serious illness whilst overseas. This medical condition has prevented you from returning to Australia. On the advice of your specialist in country A you have had to remain in Country A for ongoing treatment including close monitoring of your condition and multiple life saving medications you are required to undertake. You have undergone intensive treatment involving hospital stays for the condition. In 2012 your specialist recommended that you not go on long international flights until the ongoing tests indicated stability in your condition so that you could return to Australia for monitoring and treatment or, tests indicated an acceleration in your condition, requiring surgery which after convalescence would allow you to return to Australia. Testing of your condition in 2012 found that the condition had stabilised and you could now return to Australia. You have begun searching for employment in Australia. You will return to Australia shortly. You will rent out the property you own in Country A. You will be living with a member of your family, while you search for an apartment to live in upon your return to Australia. You will continue to seek employment upon your return to Australia.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection6(1). | Income Tax Assessment Act 1997 Section 6-5. | Income Tax assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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: 1) The resides test 2) The domicile test 3) The 183 day test 4) The superannuation test The first two tests are examined in detail in Taxation Ruling 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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. Your circumstances are similar to those established in FCT V Executors of the Estate of Subrahmanym [2001] FCA 1836 | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the dictionary definition, 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. In your case, you were residing in Country A for an extended period due to an illness that precluded you from returning to Australia due to medical treatment. It was your intention to return to Australia permanently but this could not happen until your medical condition stabilised. You are considered to be residing in Australia under this test. As you are considered to be a resident under the residency test there is no reason to consider the other tests.

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