Private ruling: Residency for taxation purposes
Date of advice: 24 January 2019
Published: March 2019
Ruling period: Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022
Date scheme commenced: 1 June 2019

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: No 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. Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Relevant facts and circumstances: You were born in Country Y. You and your family arrived in Australia in the 200X income year at which point you became a resident of Australia for taxation purposes. You became an Australian citizen in the 200X income year. You and your spouse have X adult children who all live in Australia. You and your spouse intend on moving to Country Z for work purposes in the 201X income year. You and your spouse both work for a company. You are a director of the company. You will go to Country Z to take a more active role in the management of the investment portfolio and to restructure the administration of the company. The company has offered you a very attractive remuneration package which includes accommodation, relocation and other living expenses in Country Z. The company are applying for sponsored work visas for you and your spouse. You intend on being in Country Z for at least two years with the option of extending the stay for a further two years. The property you and your spouse currently live in in Australia is owned by your spouse. Your spouse intends on selling your home in Australia prior to moving to Country Z. If the property cannot be sold then it may be rented out. You have an indirect interest in three properties in Australia which are held in a family trust that you are a potential beneficiary of. This trust also has a property overseas. You intend to withdraw your savings in Australia closing all bank accounts except for one. You will close all credit cards held with Australian financial institutions. Prior to relocating to Country Z, you intend to notify the Australian Electoral Commission of your relocation and request that your name be removed from the electoral roll. You will have all mail sent to Country Z. You will ship all personal and household items along with two dogs to Country Z. You intend on cancelling all sporting and social memberships in Australia prior to your relocation to Country Z. You will seek to cancel your relevant license prior to going to Country Z. You will take both your motor vehicles to Country Z with you. You hold a number of directorships in Australia and you intend on resigning these positions. You intend on being in Country Z for six months of the year. You will open bank accounts and credit card accounts in Country Z. You will join social and sporting clubs in Country Z. You will be a resident of Country Z for taxation purposes when you move to Country Z. You intend on visiting Australia for up to three weeks a year. You will visit family and friends in Australia and will stay in hotels while in Australia. Neither you nor your spouse are eligible to contribute to the PSS or the CSS Commonwealth superannuation funds.

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