Private ruling: Australian residency for taxation purposes
Published: September 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 01 July 2012

Ruling: Question and Answer: | Are you an Australian resident for taxation 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 are a citizen of Australia. You do not have permanent residency in any country. You were born in the xx of Australia parents. You were living in Australia for a number of years before you left to work overseas. You left Australia xxx. You have a multiple entry visa which allows you to stay in xx for xx months from the date of issue. You also hold a multiple entry work permit for xx. When you left Australia you selected 'business' on your outgoing passenger card. You went overseas to work on a project that is scheduled to take xx years. This employment contract may be extended or you may find work with another company overseas. You do not have a set return date to Australia. It is your intention to remain overseas whilst you are able to continue working, possibly for 2-5 years. You have a history of overseas employment postings. You have been back to Australia a number of times since you left: · xx to attend a wedding · xx for work · xx for work and to replace your passport. Your accommodation is provided by your employer. You have stayed in two locations since being in xx: 1. Local housing development close to your place of work 2. Your employers registered office- this facility also includes non share accommodation for staff. The registered office accommodation is some distance from the project and you only stay here when leaving xx via the international airport or when you travel to xx. You have only spent approximately Y nights in this accommodation. You are employed and paid by a xx registered company via an international bank. Local tax is removed from your pay and the balance is transferred to an account with the bank. You own properties in Australia. You lived in one property before you moved overseas. You have not rented out this property since you have been overseas. No other property has been rented out since the first half of xx. No one has lived in your properties since you moved to xx. There is power connected at all but this is because one is a property with common areas and the power cannot be disconnected, and power is required at another house for the automatic retic system. There is no telephone or internet connection at any location. You have a motor vehicle in Australia which is in storage. The only assets you took with you to xx were work related items for travel, including computer, phone and books. You have not advised Medicare or the electoral role to remove you from their records.

Relevant legislative provisions: Section 6-5 of the Income Tax Assessment Act 1997 | Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. | Detailed Reasoning - Residency: 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: · 'resides' test (ordinary concepts test) · domicile and permanent place of abode test; · 183 day test; and · Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. Where it is determined that a taxpayer 'resides in Australia' in accordance with the first test, there is no requirement to consider the other tests. The other three tests operate to broaden the definition of resident beyond the resides test. | 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 Taxation Ruling TR 98/17 residency status of individuals who enter Australia , and Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. (i) Physical presence in Australia A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In relation to this the AAT has stated that: "Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home." You lived in Australia for a number of years before you moved to xx to take up an employment contract. You have returned to Australia X times since you left in xx. You have been physically present in Australia for a short period during the financial year covered by this ruling. You consider Australia to be your home country and intend to return to Australia at some point in time. This is supported by the fact you took very little with you when you moved to xx and have not taken steps to rent out or sell the properties that you own in Australia. (ii) Nationality The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case. You are an Australian Citizen. (iii) History of residence You lived in Australia before moving to xx to take up your employment contract. You have taken up overseas employment contracts in previous years. (iv) Habits and "mode of life" The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. "Where the day to day behaviour of individuals, considered over time, is relatively similar to their behaviour before entering Australia, they are likely to be regarded as residing here. Even when their behaviour over time is different from their behaviour before entering Australia, they are likely to be regarded as residing here, when the facts of their presence indicate a routine establishing they are living in Australia." (TR 98/17). You are living in employer provided accommodation in a remote location close to your work site. You have stated that you are in xx to work and do not have any social or sporting connections where you live. (v) Frequency, regularity and duration of visits to Australia Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country. Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia. You have returned to Australia since you left in xx, specifically: · xx to attend a wedding · xx for work · xx for work and to replace your passport. (vi) Purpose of visits to or absences from Australia You are living in xx as you have an employment contact and this contract is for the period of construction which is likely to be 2 years. You wish to find further employment outside Australia once this contract ends. When you left Australia you selected 'business' as your reason for leaving. (vii) Family and business ties to Australia and the overseas country or countries Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. Family You do not have a spouse. Business or economic · You have a full time employment in xx for a period of 2 years. · You have bank accounts in Australia. Assets · You own a house and an investment property in Australia which are not being rented out as you do not have the ability to manage this from your current location. · You own a car which you have in storage in Australia. · You left all of your belongings in your house in Australia when you left and only took work related items with you to xx. (viii) Maintenance of Place of abode The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. When you left Australia you took very little with you to xx. You left all of your household effects in your house and took only work related items with you. Your house has not been rented out and is therefore available for your use when you return to Australia. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. There are some factors above which would indicate that you have ceased to be a resident of Australia, including · You have moved to live in xx to take up an employment contract, · You have only returned to Australia for short periods since you left. Equally, however there are a number of factors which support the finding that you are a resident of Australia. · you live in employer provided accommodation in a remote location, · due to the remote location of your employment you have no social or sporting connections with xx, · you only took work related items with you when you left Australia, all of your belongings remain in your house in Australia, · you did not sell your motor vehicles when you left, you placed them in storage, · You have not rented nor attempted to sell either your residence or your investment property. · Your employment contract is only for the period of construction, some 2 years. · When you left Australia you selected 'business' on your outgoing passenger card. Based on a consideration of all of the factors outlined above you are a resident of Australia according to the resides (ordinary concepts) test for the period covered in the ruling. You have maintained a continuity of association with Australia when you moved to xx to undertake an employment contract. You consider Australia to be your home country and the Commissioner is not satisfied that you have broken the continuity of association with Australia. | Detailed Reasoning - Other residency tests: Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the domicile and permanent place of abode test, 183 day test and the superannuation fund test. | Detailed Reasoning - Domicile and permanent place of abode: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. IT 2650 states that: Persons leaving Australia temporarily would generally be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice. As you are an Australia citizen and you have not taken steps to take on a new domicile of choice therefore your domicile is Australia. As you have an Australian domicile you will be a resident of Australia unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | 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. IT 2650 sets out a number of factors established by Court and Tribunal decisions which assist in determining a taxpayer's permanent place of abode; i. the intended and actual length of the taxpayer's stay in the overseas country; ii. whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time; iii. whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia; iv. whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; v. the duration and continuity of the taxpayer's presence in the overseas country; and vi. durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. As with the factors under the resides test not one single factor is decisive and the weight given to each factor depends on individual circumstances. Consideration of these factors: · you intend to stay overseas for a number of years, however your current employment contract is only for a period of about 2 years. · you intend to stay in xx until your contact expires, and then you wish to find more work in another location overseas before returning to Australia. · you are living in employer provided accommodation that is close to your worksite, · you have a residence in Australia that you have left all of your belongings in when you moved to xx, in addition you own an investment property which is currently not being rented out, · your employment contract is for the period of construction, this is expected to be about 2 years in duration, · you have a xx bank account and your income is paid electronically into this account, you have not advised Medicare to remove you from their records. The Commissioner is not satisfied that you have established a permanent place of abode outside of Australia. You are a resident of Australia under this test. | Detailed Reasoning - 183 day test: Where 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 will not be in Australia for a period of 183 days during the relevant income years this test is not relevant to your circumstances. | Detailed Reasoning - Superannuation fund tests: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the 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 do not have a spouse, you are over 16 years of age and you are not eligible to contribute to the PSS or CSS, the superannuation test does not apply to your circumstances. | Detailed Reasoning - Conclusion: The Commissioner has found you to be a resident of Australia under both the resides (ordinary concepts) test and the permanent place of abode test. You must include all of your Australian and foreign sourced income in your Australian income tax return. You may be entitled to a foreign income tax offset where you have paid tax in another country on your foreign sourced income.