Private ruling: Residency status
Published: February 2015
Date scheme commenced: 24 January 2015

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


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Detailed Reasoning - Residency: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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: • the resides test • the domicile test • the 183 day test • the superannuation test. The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia. 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 satisfy the conditions of one of the other three tests. | Detailed Reasoning - The resides test: In FC of T v Miller (1946) 73 CLR 93 at page 99-100 and Subrahmanyam v FC Of T [2002] AATA 1298; 2002 ATC 2303; ( 2002) 51 ATR 1173 at paragraph 43-44 , it was determined that the word ' resides' should be given the widest meaning. Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia , identifies a number of factors which assist in determining the residency status of a taxpayer. Although Tax Ruling TR 98/17 discusses the Commissioners view on the residency status of individuals entering Australia, the same principles can be applied to those individuals leaving Australia. According to paragraph 20 of TR 98/17 factors to be considered in determining residency in Australia are: • intention or purpose of presence; • family and business/employment ties; • • maintenance and location of assets; and • social and living arrangements. Paragraph 21 of TR 98/17 further states that: No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances. Recent case law decisions have expanded on the list of factors identified in TR 98/17. Case 5/2013 and Sneddon v FC of T (Sneddons Case) , for example, considered the following factors in relation to whether the taxpayer resided in Australia: (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. [] The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. Based on the information that you have provided, it is concluded that you have ceased to be a resident of Australia for income tax purposes under the 'resides test' from the date of your departure from Australia. Significant in reaching this conclusion is that you have departed Australia with your spouse to live and work in country X for an extended period. On arrival in country X you will establish long term accommodation and do not intend to return to Australia or maintain a place of abode in Australia. Therefore you are not a resident of Australia for income tax purposes under the 'resides test'. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case you were born in country Y, therefore your domicile of origin is country Y. You then moved to Australia and became an Australia citizen therefore electing Australia as your domicile of choice. You departed Australia to live and work in country X. Whilst employed in country X you do not intend return to Australia but rather spend your time off in country Y, therefore reverting to your 'domicile of origin' country Y. Accordingly, you are not a resident of Australia for income tax purposes under the 'domicile test' from the day of your departure from Australia. | 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 physically be present in Australia for a period of greater than 183 days from the date of your departure. Therefore you will not be a resident of Australia for income tax purposes under the 183 day test. | Detailed Reasoning - The Superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. You and your spouse have never been a member of a CSS or PSS. Accordingly, you are not a resident under this test. | Detailed Reasoning - Conclusion: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes for the years included in this ruling.

The advice in the Register has been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict ATO policy or decisions. | Relevant facts: You were born in the country Y and are a resident of Australia and country Y. | You have a spouse and no dependants. | You departed Australia to take up an employment position in country X. | Your spouse, who is the CEO of your overseas employer, has accompanied you to country X. | You entered country X on a resident permit and work permit that are valid for a limited period. Your employer will renew these permits when required. | The visa's only grant you temporary residency for work purposes. | You intend to reside in country X for an extended period. | You formed the intention of residing outside of Australia after resigning from your Australian employer. | In country X, you and your spouse are provided with accommodation in a multi bedroom home, with each having an ensuite. The other bedrooms are taken up with other company employee's. | Prior to your departure from Australia you were living in your home purchased in Australia. | You will be shipping your personal belongings including furniture, crockery, cutlery, personal belongings etc. to country X. | Conditions of your employment are such that you will work for a number of weeks followed by a number of weeks rostered time off. | During the rostered off periods your employer will provide you with return airfares to the country Y which you intend to utilise. | Due to travel constraints you do not anticipate that you will return to Australia during your employment. | You do not have any sporting or social ties to either country X or Australia. | Your assets in Australia consist of a small parcel of shares, a bank account and your home that will be leased out to tenants. In addition a small number of a small number of belongings will be kept in storage and shipped at a later stage. | The only assets that you will have overseas are personal items as previously that you will bring with you from Australia. | You and your spouse have never been a Commonwealth Government of Australia employee. | Prior to departing Australia you informed the Australian Electoral Commission to remove your name from the electoral role. | Prior to departing Australia you informed your healthfund to suspend your membership. | Prior to your departure you informed your bank and the share registry that you were a foreign resident for tax purposes. | It is your intention to reside in country X for an extended period before engaging in further foreign employment.