Private ruling: Residency status
Published: February 2015
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | Yes.

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 were born in Australia and are a citizen of Australia. You are single with no dependants. You gained employment in country V on an annually renewed contract. You departed Australia and moved to country V to commence your employment. You entered country V on an employment pass that is required to be renewed annually. Whilst employed in country V, you live in employer provided accommodation that you share with other employees. Since your departure from Australia you have returned on a number of occasions for short periods. Your assets in Australia consist of investment properties, a bank account and a motor vehicle. You are receiving rental income from your rental properties 2 properties. A bank account that you opened on arrival in country V is your only overseas asset. Your personal and household effects have remained in Australia at your parents' home where you resided prior to your departure. Your social and sporting ties in Australia consist of being a member of the sporting association. You do not have any social or sporting ties in country V. You have never been an employee of the Commonwealth Government of Australia. You have remained on the Australian electoral role and vote via post. You have not informed any Australian financial institutions, Medicare or your private health fund that you no longer reside in Australia. You have lodged an income tax return with the country V authorities where you were classified a 'Non-Permanent' resident. A portion of your overseas remuneration is being transferred to Australia to assist in mortgage repayments for your rental properties. You intend to return to Australia at the conclusion of your employment contract. When you return to Australia you will recommence employment with your family's business.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1 | Income Tax Assessment Act 1936 Subsection 6(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 latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. For the purposes of determining your residency status we will look at the domicile 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 Australia, therefore your domicile of origin is Australia. From the information that you have provided you did not indicated any intention of becoming a citizen or permanent resident of country V, therefore your Australian domicile has remained unchanged. 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. Factors used in determining a taxpayer's permanent place of abode include: • the intended and actual length of the taxpayer's stay in the overseas country; • whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or return to Australia at some definite point in time; • whether the taxpayer has established a home outside Australia; • whether any residence or place of abode exists in Australia or has been abandoned because of overseas absence; • the duration and continuity of the taxpayer's presence in the overseas country, and • the durability of association that the person has with a particular place in Australia, that is, maintaining bank accounts in Australia. Based on the facts that you have provided, the Commissioner is not satisfied that you have established a permanent place of abode in country V. Significant in reaching this conclusion are that you intend to stay in country V only as long as you are employed before returning to Australia. While in country V you live in shared accommodation provided by your employer. Your household and personal belonging have remained at your parent's residence where you resided before your departure. In terms of assets and family, your ties to Australia are significantly stronger to your ties to country V. Therefore, as your Australian domicile has remained unchanged and the Commissioner is not satisfied that you have established a permanent place of abode outside of Australia, you have remained a resident of Australia for income tax purposes under the 'Domicile test'. As it has been determined that you are a resident under the domicile test, there is no requirement to examine whether you are an Australian resident for income tax purposes under any of the remaining 3 tests. Accordingly, you are a resident of Australia under the 'domicile' test for the 2013 -14 income year under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.