Private ruling: Residency
Date of advice: 9 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No

Relevant facts and circumstances: You, your spouse and dependent children moved to Country X. You relocated due to your spouse receiving a permanent employment opportunity. You intend to remain in Country X for three to five years and then return to Australia. Your spouse has a skilled job visa which is valid for 5 years. You and your family will rent a property in Country X for at least 12 months. You intend to purchase a property at some time dependant on your circumstances. You took all of your household and personal effects to Country X. Your previous family home is now being rented out. You also have an additional investment property which is rented. You have maintained bank accounts in Australia. Your extended family remain in Australia. You intend to return to Australia once for a period of three weeks. During your visit, you will stay at a family member’s home. You cancelled your private health insurance policy. Centrelink are aware of your departure. You have maintained social connections in Australia through social media. You have cancelled your personal training sessions in Australia. You have established social connections in Country X. You and your children have sporting connections in Country X. You have not obtained any overseas qualifications but intend to do so. Neither you nor your spouse is a member of a superannuation fund established under the Superannuation Act 1990.

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

Reasons for decision: Summary: 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 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: ● resides 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Detailed Reasoning - The resides (ordinary concepts) test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. Taxation Ruling IT 2650 Income Tax: Residency – permanent place of abode outside Australia , emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. Physical presence in Australia Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia , considers physical presence or length of time by itself is not determinative of residency. An individual's behaviour as reflected by a degree of continuity, routine or habit that is consistent with residing in Australia is relevant. Frequency, regularity and duration of visits to Australia ● You will return to Australia once for a period of less than 30 days during a three year term in Country X. ● During this time you will reside at a family member’s home. Family and business ties with Australia ● Your spouse and two children have accompanied you to Country X. ● Your spouse has a permanent employment contract in Country X. You intend to remain there for three to five years. ● You intend to gain part-time employment after six months in Country X. Maintenance of a place of abode ● Your home in Australia is being rented out and not available to you to reside in. ● You are renting a property in Country X for at least 12 months and then looking to buy. ● You took all of your household and personal effects with you to Country X. Based on all the facts, your behaviour is consistent with not being an Australian resident for taxation purposes. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. 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. You have demonstrated that your domicile will not be in Australia for the following reasons: ● Your home in Australia is being rented out and not available for you to reside in. ● You do not have any household and personal effects left in Australia. ● You have cancelled your private health insurance. ● You have social connections through social media in Australia and you have cancelled personal training. You have demonstrated that you will have a new domicile by choice in Country X for the following reasons: ● You are renting a property in Country X for at least 12 months and then looking to buy. ● All of your household and personal effects are located in Country X ● You have established social connections in Country X. ● Your family have established sporting commitments in Country X. | Detailed Reasoning - The 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. As discussed above, for the immediate future your intention is to reside in Country X and that will be your usual place of abode. The Commissioner is satisfied that you do not meet the 183 days test and will not be considered a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is: ● a member of the superannuation scheme established by deed under the Superannuation Act 1990 ; or ● an eligible employee for the purposes of the Superannuation Act 1976 ; or ● the spouse, or a child under 16, of a person covered by the above. You and your spouse are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test. | Detailed Reasoning - Your residency status: As you would not satisfy any of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you will not be a resident of Australia for income tax purposes.