Private ruling: Residency
Date of advice: 24 July 2018
Published: October 2018
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you resident of Australia for taxation purposes? | A1: Yes

Relevant facts and circumstances: You have lived in Australia for many years. You left Australia in the year ended 30 June 20XX for employment in Country X. You remained employed with your previous employer on a fractional basis. Your spouse remained in Australia. You maintained your family home in Australia in which your spouse resided. You returned to Australia several times during your absence for work and personal purposes. Your spouse visited you in Country X on several occasions. You rented a property in Country X on a long term lease of 12 months. You intended to extend this lease by a further 12 months. You had a dispute with your employer and returned to Australia during the year ended 30 June 20XX. You were present in Australia for greater than 183 days in the year ended 30 June 20XX and the year ended 30 June 20XX. Neither you nor your spouse are contributing members of the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme.

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

Reasons for decision: Detailed Reasoning - Your residency status: 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. 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. The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered. If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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'. Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are: ● whether the person is physically present in that country at some time during the year of income ● the history of the person's residence and movements ● if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits ● if the person is outside the country for part of the relevant income year, the purpose of the absences ● the family and business ties which the person has with the particular country, and ● whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there. Taxation Ruling IT 2650 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. | Detailed Reasoning - Presence within Australia: You were in the Australia for great than 183 days in the year ended 30 June 20XX and in the year ending 30 June 20XX. | Detailed Reasoning - History of residence and movements: You have lived and worked in Australian for many years. In the year ended 30 June 20XX you moved to Country X for work, taking up a long term lease on a property. You returned to Australia several times during your time overseas. You returned to Australia permanently during the year ended 30 June 20XX. | Detailed Reasoning - Frequency, regularity, duration and purpose of visits to Australian: You returned to Australia several times during the period of time overseas. You returned to Australia for private and work purposes. | Detailed Reasoning - Family and Business ties: Your spouse remained in Australia for the duration of your time overseas, visiting you several times. The majority of your business ties were held in Country X, however, you remained employed in Australia on a fractional basis. | Detailed Reasoning - Place of Abode: You had a place of abode available in Australia being your family home where you spouse currently resides and you also had a place of abode available to you in Country X being a rental property on a long term lease. In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period. Considering all of these factors whilst you were outside of Australia and the majority of your employment ties were not Australian you still had significant family ties within the country. The fact that you still maintained a family home in Australia indicates that you kept a connection with Australia. Therefore, you meet the requirements of the resides test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the ‘resides’ test), we will also include a discussion of the other residency tests for completion. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to 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 established long term accommodation Country X. You have therefore established a permanent place of adobe in Country X and will be a non-resident of Australia under the domicile test. | Detailed Reasoning - 183 Days Test: The 183 days test applies when a taxpayer is present in Australia for 183 days or more in an income year unless the Commissioner is satisfied that they have a usual place of abode outside of Australia and that person does not intend to take up residence in Australia. You were in the Australia for greater than 183 days in the year ended 30 June 20XX and in the year ending 30 June 20XX. You kept and continued to maintain your primary residence in Australia whilst you were overseas. In during the year ended 30 June 20XX you moved to Country X for work, taking up a 12 month lease on a property with the intention of extending the lease for a further 12 months. You have place of abode in both countries. The term ‘usual’ is not defined in taxation legislation and thus takes its ordinary meaning. The Macquarie dictionary provides the following definitions for ‘usual’: 1. habitual or customary. 2. such as is commonly met with or observed in experience. 3. in common use. You had a place of abode in both Country X and Australia. During the year ended 30 June 20XX and 30 June 20XX you spent the majority of your time in Australia. Prior to moving to Country X you had been present in Australia for many years. In the Commissioner’s view your usual place of abode is your home in Australia. From what you provided you intended to reside in Australia for the majority of the year ended 30 June 20XX until you left for Country X and on returning to Australia intended to reside for the majority of the year ended 30 June 20XX. As such you will meet the requirements of the 183 day test for the periods in question and will be a resident under this test. | Detailed Reasoning - Superannuation Test: You and your spouse are not contributing members of the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS). As such you will not be a resident of Australia for taxation purposes under this test.