Private ruling: Residency
Date of advice: 24 June 2016
Published: August 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022 | Year ending 30 June 2023 | Year ending 30 June 2024 | Year ending 30 June 2025
Date scheme commenced: 1 July 2015

Ruling: Q1: Did you cease to be a resident of Australia when you departed Australia? | A1: Yes

Relevant facts and circumstances: You were born in Australia and are a citizen of Australia. You are more than 50 years old. You have lived and worked in Australia for your whole life except between a four year period when you lived and worked in Country Z. You are currently living in Country A with your spouse and youngest child, who are financially dependent on you. You work in Country A. Your role is a permanent full-time position. Your child attends school in Country A. You have other family in Australia who are financially independent of you. Neither you, nor your spouse, have been employed by the Australian Commonwealth Government. You intend to stay in Country A for at least the remainder of your working life. You hold a Country A working visa, for an initial period of two years that will be renewed for a further period. You have leased your main residence in Australia to an unrelated party at arm's length rates. Your name has been removed from the electoral roll. You have advised Medicare that you have moved to Country A and suspended your private health insurance. You have leased a family home in Country A for you and your family for two years. Your personal effects, including your pet, were shipped to Country A. You have opened a bank account in Country A and receive your salary in that account. You cancelled your social club memberships in Australia and you have joined a sporting club in Country A. You intend to travel Australia occasionally for business and holidays. You plan to stay in hotels or with family members during these trips.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1), and | Income Tax Assessment Act 1997 section 6-5.

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are foreign resident for taxation purposes, your assessable income includes only income 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 an Australian resident 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. 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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place. As you are residing outside of Australia, you are not considered to be residing in Australia. | 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. | Detailed Reasoning - Domicile: Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law. In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. In your case you advised that you moved to Country A under a 2 year working visa. Your spouse, child and pet have travelled to Country A and you are living permanently in Country A in a family house you have leased for a period of 2 years. You have leased your main Australian resident to an unrelated party. You intend to remain in Country A for at least the remainder of your working life. You have returned and will return to Australia for both business and holidays. After weighing the above factors, it is considered that you have a new domicile in Country A. | Detailed Reasoning - 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 a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. Although you are maintaining an association with Australia through your property, bank accounts and family, your associations with Country A are more significant as: • You have obtained long term rental accommodation in Country A; • You have obtained permanent employment in Country A; • You have opened a bank account in Country A; • Your spouse and child have moved to Country A; and • You have shipped your personal effects including your pet to Country A. Based on these facts, it is therefore considered that you have established a permanent place of abode in Country A. Therefore, you are not considered to be an Australian resident under the domicile test. | Detailed Reasoning - The 183 day test: When 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 do not satisfy this test as you have established a permanent place of abode outside of Australia. | Detailed Reasoning - The Superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a member of the PSS or CSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not treated as a resident under this test. | Detailed Reasoning - Your resident status: As you are not deemed to be an Australian resident under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you ceased to be a resident from the date of your departure from Australia.