Private ruling: Residency
Date of advice: 13 August 2015
Published: August 2015
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period from B to C? | Yes.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You do not have permanent residency of any other country. You went to Country Y for work purposes. You have a work visa to enter Country Y. This visa does not allow you to stay permanently in Country Y. Your spouse has a dependant spouse visa to enter Country Y which does not allow them to stay permanently in Country Y. Your spouse has accompanied you to Country Y. Your contract in Country Y was for 12 months. Your contract was terminated early and you will return to Australia. Your intention was to return to Australia at the end of your work contract in Country Y. You have no assets overseas. You have a house in Australia which remained vacant for the duration of your stay in Country Y. You and your spouse took clothing and toiletries to Country Y. You have a car, house hold belongings and cash assets in Australia. Your employer provided you with a fully furnished house in Country Y. Neither you nor your spouse is 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. You went to Country Y for work purposes. Your work contract was for 12 months. Your spouse has gone to Country Y with you. You intended to make trips back to Australia. Your employer provides your accommodation in Country Y. Based on the facts above you are not residing in Australia according to ordinary concepts | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be 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 Australia. The Commissioner is not satisfied that you have a permanent place of abode outside Australia for the following reasons: • You live in employer provided accommodation • Your contract was for 12 months • You only took clothes and toiletries to Country Y • You left your belongings in your home in Australia You are a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period you were in Country Y. You are required to declare this income in your Australian tax return.