Private ruling: Residency
Date of advice: 25 August 2015
Published: August 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 April 2015

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

Relevant facts and circumstances: You were born overseas. You grew up overseas. You moved to Australia. You are a citizen of Australia and a foreign country. You departed Australia to live and work in a foreign country. You have stated that you became a resident of a foreign country from this date. Your main reason for moving to a foreign country was to join your spouse who has been living there for several years. Both of you plan to stay in a foreign country for several years. You may then decide to either remain in a foreign country or relocate to another foreign country. You intend returning to Australia in the long term. You and your spouse live in a rented house in a foreign country. Your spouse has received a private ruling from the ATO stating that they are a non-resident of Australia for taxation purposes. You intend visiting Australia annually for short periods to inspect your rental properties, visit business partners and attend social events. Your parents in law spend half a year in a foreign country and half a year in Australia. Your spouse's child is currently living in a foreign country. Your family lives in Australia and another country. Neither you nor your spouse has ever been eligible to contribute to the PSS or CSS and you are over sixteen years old. Your Australian assets and associations You have moved your personal effects and belongings to a foreign country. You operated a business in Australia as a sole trader until you moved to a foreign country. It was deregistered. You were previously executive director of another company. A new executive director was appointed before you relocated to a foreign country. You intend setting up a new company in a foreign country to continue this business venture marketing this product to a foreign country and else ware. Prior to your departure you were the sole resident director of company which holds property. The property is now managed by someone else The Australian dwelling you lived in has been listed for sale. You own another commercial property which is currently rented to tenants. You have disposed of your pets. You have a member balance with an Australian superannuation fund. This is not a Commonwealth Government superannuation fund. You have maintained bank accounts in Australia. You use these to pay occasional Australian bills arising after your departure from Australia. You have notified the bank that you are non-resident so that non-resident withholding tax can be deducted from any interest you earn. When you departed Australia you cancelled credit card and bank accounts. You have had your name removed from the Australian Electoral Roll. You have requested you Medicare registration to be cancelled. You have had you name removed from these health providers. You have informed these service providers that you are moving overseas permanently. You have cancelled all your subscriptions to Australian periodicals. You have cancelled all your memberships to Australian business related organisations. You have cancelled all your memberships to Australian non-business related organisations. Your foreign country assets and associations You live in rented accommodation in a foreign country which you consider to be your home and main residence. You and your spouse have purchased new furniture and other household goods for your foreign country residence. You have been gradually moving your personal effects and belongings to a foreign country over the last several years using your baggage allowance when you travelled to a foreign country. You have opened a bank account in a foreign country. You have registered as a voter in a foreign country and voted in national elections. You have applied for a number which will allow you to work in a foreign country. You are a registered member on the public health system. You have broadband connection in a foreign country. You have joined a gym and several societies clubs a foreign country.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 6-5 | 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 (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 IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 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 (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. 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. There are several factors outlined above which indicate that you have ceased to be a resident of Australia; specifically you: • departed Australia to live and work in a foreign country • moved to a foreign country was to join your spouse who has been living there for several years • have moved your personal effects and belongings to a foreign country • will sell the house in Australia you lived in • live in rented accommodation in a foreign country which you consider to be your home and main residence • and your spouse have purchased new furniture and other household goods for your foreign country residence • have opened a bank account in a foreign country • have registered as a voter in a foreign country and voted in national elections • have applied for a number which will allow you to work in a foreign country • are a registered member on the public health system • have broadband connection in a foreign country • have joined several clubs an societies in a foreign country • have shut down a business in Australia which you will re-establish in a foreign country • cancelled your Australian credit card and most of your bank accounts • have had your name removed from the Australian Electoral Roll • have requested you Medicare registration to be cancelled • have had you name removed from health providers • have informed service providers that you are moving overseas permanently • have cancelled all your subscriptions to Australian periodicals • have cancelled all your memberships to Australian business related organisations • have cancelled all your memberships to Australian non-business related organisations Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the relevant period. | 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. 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, you were born overseas. You have a foreign country citizenship. You move to Australia and acquired Australian citizenship. Australia then became your domicile of choice. Therefore, your domicile of origin was the country where you were born and you changed your domicile to Australia. You changed your domicile of choice to a foreign country when you moved there to live and work. 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. 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. 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. You have established a permanent place of abode in a foreign country as your presence there is permanent in nature. The Commissioner is satisfied you have a permanent place of abode outside of Australia. Therefore, you will not be 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 you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. You will not be present in Australia for a total period of more than half of a year of income. Therefore you are not a resident of Australia 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. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You have stated that neither you nor your spouse is eligible to contribute to the PSS or the CSS. Further, you are more than 16 years of age. Therefore, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Your residency status: 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 period of the ruling.