Private ruling: Residency
Date of advice: 16 November 2016
Published: March 2017
Ruling period: Year ended 30 June 201X | Year ending 30 June 201X | Year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. In early 20XX, you left Australia to take up an employment position in Country X with an entity related to your Australian employer for an initial period of XX years. You do not intend to return to Australia to live and will apply for an extension of your employment contract. You are renting an apartment in Country X. Your employment income is paid into a Country X bank account and you have private health insurance in Country X. The relationship with your spouse broke down in early 20XX and you officially separated from your spouse in late 20XX. Your ex-spouse will receive the dwelling you own as part of the marriage split and you will no longer own any property in Australia. You are currently making mortgage and car finance payments which will cease after the marriage split is finalised and you will also close your Australian bank account and credit card at that time. You are not required to provide any financial support to your ex-spouse and step-children and you do not have any children of your own. Your parents live in Australia. You returned to Australia for several weeks in late 20XX and during this time you visited your parents and made arrangements regarding your divorce settlement. You have had your name removed from the Australian electoral roll. You intend to notify Medicare that you have left Australia. You are not a member of an Australian Commonwealth government superannuation scheme.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision: Summary: 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 (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 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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides (ordinary concepts) 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'. The Commissioner may make reference to the following factors in determining whether a taxpayer is 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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. In your case, there are various factors that indicate that you are no longer residing in Australia, specifically: ● you left Australia to work in Country X for an expected period of XX years and you intend to extend your employment contract; ● you do not intend to return to Australia to live; ● you have your own rental accommodation in Country X; ● you have legally separated from your spouse in Australia; and ● you no longer have a place of abode in Australia. Based on the above, you are no longer residing in Australia. Therefore, you are not a resident of Australia under the resides test of residency. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, your domicile of origin is Australia and at the present time there is no evidence to suggest that you have legally changed your domicile to Country X. Therefore, you still have an Australian domicile. | Detailed Reasoning - Permanent place of abode: 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. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. In your case, there are various factors that indicate that have a permanent place of abode outside Australia, specifically: ● you left Australia to work in Country X for an expected period of XX years and you intend to extend your employment contract; ● you do not intend to return to Australia to live; ● you have your own rental accommodation in Country X; ● you have legally separated from your spouse in Australia; and ● you no longer have a place of abode in Australia. Based on the above, the Commissioner is satisfied you have a permanent place of abode outside Australia. Therefore, you are not a resident of Australia under the domicile and permanent place of abode test of residency. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You are not a resident of Australia under this test as you will not be present in Australia for more than 183 days during any of the relevant years. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a resident of Australia under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes for the relevant income years.