Private ruling: Residency
Date of advice: 18 March 2016
Published: May 2016
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 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 Australia is your country of origin. You and your family lived together in country A in the past. In a particular year your spouse and children returned to live in Australia. You are contracted to work for your employer in country A until your retirement which is many years away. You intend to reside in country A at least until your retirement and possibly permanently. You have obtained permanent residency in country A. Your spouse has permanent residency in country A and your children have right of abode there. Your spouse and children returned to Australia for the children's schooling and to assist your spouse's elderly parents. You own an apartment in country A which you live in. In Australia you own less than 5 investment properties, have 1 bank account and a super fund left over from working in Australia. Your spouse and children live in a rental property in Australia. Your spouse and children travel to country A on most school holidays. You financially support your spouse and children and visit them once or twice a month when they are in school. You sold all your household effects before leaving Australia many years ago. You are employed in country A. Your work roster requires you to travel various routes. It is very rare for you to be rostered on an Australia route. Neither you nor your spouse are eligible to contribute to the relevant Commonwealth superannuation funds.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(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 (i) Nationality (ii) History of residence and movements (iii) Habits and "mode of life" (iv) Frequency, regularity and duration of visits to Australia (v) Purpose of visits to or absences from Australia (vi) Family and business ties to different countries (vii) 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 moved to country A with your spouse and children for work purposes. • Your spouse and children returned to Australia to live. • You will remain in country A until your retirement and have no intention of returning to Australia. • You and your spouse have permanent residency in country A. • Your spouse and children return to country A on most school holidays and you intend visiting them in Australia once or twice a month while your children are at school. 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 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 Australia. Your domicile of choice is country A. 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 will not be in Australia for more than 183 days in any financial year. 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 and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test. It is noted that you asked for the private ruling to apply for the 20xx income year onwards. The Commissioner does not rule for indefinite or extended periods. Therefore, we have only ruled for the 20xx to 20yy income years.