Private ruling: Residency for taxation purposes
Date of advice: 7 October 2015
Published: October 2015
Ruling period: 1 July 20XX to 30 June 20ZZ.
Date scheme commenced: 1 July 20XX.

Ruling: Question and answer: | Are you an Australian resident for income tax purposes for the relevant period? | No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision: Summary: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are: • the resides test, • the domicile test, • the 183 day test, and • the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. | Detailed Reasoning - The resides test: The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Your immediate family came to Australia in 20WW and they reside in a home owned by yourself and your spouse. That home is available for you to reside in any time you come to Australia but the facts of your case are such that it cannot be said this home is your 'settled or usual abode'. Since your family came to Australia you have remained living in the family home in country A which is where your employment as a professional is based and where you intend to continue to reside until you retire. Although you have travelled to Australia regularly since your family came here, either in your capacity as a professional, or on holidays, and you have been able to stay with your family more often that not when you have been in Australia, this is not sufficient to suggest you are residing in Australia according to the ordinary meaning of the word 'resides'. Looking at the facts of your case, it can be seen that during the financial years ended 30 June 20XX through to 30 June 20YY you spent a greater number of days/nights at your home in country A than you spent in Australia. This supports the conclusion that your 'settled or usual abode' was your home in country A during those periods. You have indicated you will spend about 120 days in Australia in the financial year 1 July 20XX to 30 June 20ZZ. This is approximately equivalent to the number of days you were in Australia for each of the financial years ended 30 June 20XX through to 30 June 20YY inclusive. This supports the conclusion that your 'settled or usual abode' for the period 1 July 20XX to 30 June 20ZZ will be your home in country A, as it has been for the past several years. Considering the above, you will not be a resident of Australia for taxation purposes under the resides test for the period 1 July 20XX to 30 June 20ZZ. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied the person's permanent place of abode is outside Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Your domicile of origin is country A and although you have obtained Australian citizenship, the Commissioner does not consider the granting of Australian citizenship has resulted in you obtaining a new domicile by choice in Australia. As stated above, to acquire a new domicile by choice you must have an intention to make your home indefinitely in a country outside your domicile of origin. Considering the facts of your case, the Commissioner is satisfied you have not intended to indefinitely reside in Australia since you became a citizen and nor do you have an intention to do so in the period 1 July 20XX to 30 June 20ZZ. The Commissioner has formed this view because: • You have stated you obtained your Australian citizenship to have the right to remain in Australia if you choose to. • You cannot say with certainty that you will migrate to Australia when you retire. Rather, you can only say with certainty that you will remain living in country A until you retire. • You have not resided permanently in Australia since being granted citizenship and have no intention of doing so before you retire. • You remain a citizen of country A, you have continued to reside in country A, and you will continue to reside there until you retire. Considering the above, it cannot be said you have an Australian domicile. As a result, it is not necessary to consider where your permanent place of abode is for the purposes of this test of residency and you will not be a resident of Australia for taxation purposes under this test between 1 July 20XX and 30 June 20ZZ. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You have stated that you will not be in Australia for more than 183 days in the period 1 July 20XX to 30 June 20ZZ. Accordingly, this test will not operate to make you a resident of Australia during that period. | Detailed Reasoning - The superannuation test: The Commonwealth superannuation test does not apply to you. | Detailed Reasoning - Conclusion - your residency status: Based on the facts you have provided you will not be a resident of Australia for taxation purposes for the period 1 July 20XX to 30 June 20ZZ.

Relevant facts: You were born in country A. | You are a citizen of country A. | You are a professional with an international airline based in country A. | Your spouse and children (your family) have lived in Australia for several years in a home you own with your spouse. | You have remained living in country A in a home you own. | You intend to remain living in country A until you retire. | You became an Australian citizen so you would have the right to remain in Australia if you choose to but you are not certain if you will reside in Australia when you retire. | You have no intention of permanently residing in Australia at this time. | You are a resident of country A for taxation purposes. | You have family and social ties in country A and you are an active member of a church group and several professional organisations in country A. | In Australia, you are not a member of any social club, church group, professional or sporting organisation. | Your assets in country A are more significant than your assets in Australia. | You only travel to Australia when it is required by your employment, or for holidays. | You are able to stay with your family in your Australian home on most occasions you come to Australia. | You are never in Australia for more than 183 days during a financial year and you will not be in Australia for more than 183 days between the relevant periods. | The number of days you spent at your family home in country A during the financial years ended 30 June 20XX through to 30 June 20YY, exceeded the number of days you were in Australia. | You are not, and you do not have a spouse who is, either: | • a member of the public sector superannuation scheme (PSS) established under the Superannuation Act 1990, or | • an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) established under the Superannuation Act 1976 .