Private ruling: Residency
Date of advice: 10 March 2016
Published: May 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: General You were born overseas and are a citizen of an overseas country. You became an Australian citizen when you moved to Australia. Having worked a season in a foreign country and met your now spouse then decided to make a foreign country your home. You departed Australia. You reside together with your spouse and children in a foreign country. You have lived at an address in a foreign country for several years. You and your spouse jointly own and operate businesses in a foreign country. You were granted permanent residency status in a foreign country. Prior to that, you had work permits. The first permit was supplied by your employer. You intend spending some time each year (together with your spouse and children) with your relatives in Australia. You intend staying in Australia for up to several months within any twelve month period. You will also spend time visiting your spouse's family overseas. Your intention is to re-locate permanently to Australia in several years' time. You cancelled your health care in Australia and now have international health cover. You are not sure what you stated when completing the incoming and outgoing passenger cards, except on your most recent arrival, you stated that you are a visiting non-resident Australian. You have not lodged any Australian income tax returns while overseas. You are a tax resident in a foreign country and you lodge company and partnership tax returns there. As a preparatory step to re-locating permanently to Australia, your spouse will apply for a permanent partner visa. You informed the Australian Electoral Commission of your move overseas and had your name removed from the Australian electoral roll. You did not inform Medicare of your movement overseas. Neither you nor your spouse is a member of the CSS or the PSS. You are more than 16 years of age. Accommodation Prior to leaving Australia, you rented a flat. You lived with relatives for the last few months before your departure. You intend to purchase an investment property in Australia the near future. When in Australia, you will stay in this dwelling. It will be made available for renting when you not in Australia. Assets Your only asset in Australia is a bank account held jointly with your spouse. You use this account during your holidays in Australia. The bank is aware that you live in a foreign country. You sold your personal belongings and had all remaining household goods shipped to a foreign country. Photos and anything personal you stored at a relative's place. You have no Australian income sources. Your overseas assets are: • two companies in a foreign country • land and dwellings in more than one foreign country • vehicles in more than one foreign country • bank accounts in more than one foreign country • household effects in more than one foreign country. Your current sources of income are from your business and investments in a foreign country. You bank accounts in Australia will be used for moving money from overseas in order to purchase the property, collecting rents from this property and to pay travelling and living expenses while in Australia. Family and social connections You have children. You have not maintained any professional or sporting associations with Australia but you do have friends and family here. In a foreign country you part of organisations linked to your business. You have a foreign country driver's licence. You have no professional or occupational memberships in Australia. Employment There is no position of employment held or being held for you in Australia. You will not engage in any employment in Australia during your visits.

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 for a foreign country. Since then, you have resided there with your spouse and children. • You were granted permanent residency status in a foreign country. • Prior to leaving Australia, you lived in rented accommodation or with relatives. • You sold your personal belongings and had all remaining household goods shipped to a foreign country. Anything personal you stored with relatives. • Your sources of income are from your business and investments in a foreign country. You have no income from Australia and no job being held for you in Australia. • Your only asset in Australia is a bank account. • You have extensive assets overseas: • an interest in companies in a foreign country • land and dwellings in more than one foreign country • vehicles in more than one foreign country • bank accounts in more than one foreign country • household effects in more than one foreign country. • You have not maintained any professional or sporting associations with Australia but have friends and family in Australia. • In a foreign country you part of several organisations linked to your business. • You have a foreign country driver's licence. • You cancelled your Australian health care. • You have not lodged any Australian income tax returns while overseas. • You are a tax resident in a foreign country and you lodge company and partnership tax returns there. • You had your name removed from the Australian electoral roll. • You (together with your spouse and children) intend spending several months each year with your relatives in Australia. • Your intention is to re-locate permanently to Australia in several years. • You intend to purchase an investment property in Australia which you will live in while in Australia and make available for renting when not in Australia. On balance, 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 not maintain a continuity of association with Australia for the period of the ruling. | 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. As you are still an Australian citizen while living in a foreign country, your domicile is Australia and remains unchanged. 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 for the period of the ruling. | 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 intend spending several months in Australia with your spouse and children staying with your relatives. You will not been present in Australia for a total period of more than half of a year of income. Therefore you will not a resident of Australia under the 183-day test for the period of the ruling. | 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.