Private ruling: Residency
Date of advice: 11 December 2015
Published: February 2016
Ruling period: Year ended 30 June 2015 | 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
Date scheme commenced: 1 July 2014

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes before you formed the intention to remain outside Australia permanently? | Yes. | 2. Are you a resident of Australia for taxation purposes after you formed the intention to remain outside Australia? | No.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia and Country Y. You went to Country Z for work purposes. Your work contract is for an indefinite period of time. You have a work visa for Country Z which was granted in. You lived in temporary accommodation in Country Z for a number of months. You have been renting permanent accommodation in Country Z since forming the intention to remain outside Australia permanently. The accommodation is fully furnished and is for your sole use. You do not intend on returning to Australia to live. You will not exceed 183 days in any financial year in Australia. You have sold your family home in Australia. You have a property in Australia which you do not live in and remains vacant. You have a bank account in Australia and a self-managed super fund which you will roll over into a public superannuation fund. You have an adult child who lives in Australia. Your spouse accompanied you to Country Z. You took personal items with you to Country Z. You left some of your household furniture in your vacant house in Australia. You and your spouse are not eligible to contribute to the relevant Commonwealth superannuation funds.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 6(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 . 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 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. You went to Country Z for work purposes a number of months ago. You stayed in temporary accommodation in Country Z for a number of months. You formed the intention to leave Australia permanently after working in Country Z for a number of months. You do not intend on returning to Australia to live and work. You rent permanent accommodation in Country Z which is fully furnished and for your sole use. Your spouse accompanied you to Country Z. You have sold your family home in Australia. Based on the facts above you were residing in Australia according to ordinary concepts for the period prior to your decision to leave Australia permanently. You are not residing in Australia according to ordinary concepts from the date you formed the intention to remain permanently outside 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. 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. Your domicile of origin is Australia. The Commissioner is satisfied that you have a permanent place of abode outside Australia for the following reasons: • Your work contract is for an indefinite period. • you have left Australia permanently. • Your spouse has gone to Country Z with you. You are not a resident under this test from the date you formed the intention to remain permanently outside Australia. | 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. You have not been in Australia for more than 183 days in any financial year since leaving for Country Z. You will not exceed 183 days in any future income year in Australia. You are not a resident under this test. | Detailed Reasoning - The superannuation test: 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 and your spouse are not eligible to contribute to the relevant Commonwealth super funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: You were a resident of Australia for taxation purposes from the date you arrived in Country Z until you formed the intention to remain permanently outside Australia. You are not a resident of Australia for taxation purposes from the date you formed the intention to remain outside Australia permanently.