Private ruling: Residency
Date of advice: 17 November 2016
Published: March 2017
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20ZZ
Date scheme commenced: 1 July 20XX

Ruling: Q1: Were you a resident of Australia for tax purposes during the period you worked in Country X? | A1: No.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You secured a job with a company in Country X. You purchased a one-way ticket to Country X and moved out of your parent's home where you had been living. Your employment contract had no end date and you intended to work in Country X for several years. You rented a room in Country X where you lived during your time there. You made two return visits to Australia to visit your parents. You opened a bank account in Country X. You notified the Australian Electoral Commission that you were moving overseas. During your time in Country X, you maintained your Australian bank accounts and received share dividend income. The health of one of your parents deteriorated and you tendered your resignation after spending just over 12 months in Country X as you wanted to return to Australia to be closer to your parents. You paid income tax in Country X on your employment income. You were not a member of an Australian Commonwealth government superannuation scheme during the time you were in Country X.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1)

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 provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: ● the resides test ● the domicile and permanent place of abode test ● the 183 day test ● the superannuation test. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax 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'. In determining where an individual resides, it should be noted that a person does not necessarily cease to be a resident because he or she is physically absent from Australia. Instead, the test is whether the person has retained a continuity of association with a place in Australia, together with an intention to return to that place and an attitude that the place remains home (Joachim v Federal Commissioner of Taxation 2002 ATC 2088 ). The Commissioner may make reference to the following factors in determining whether a taxpayer is 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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. In your case, there are various factors that indicate that you were not residing in Australia during the time you were based in Country X, specifically: ● your employment contract had no end date; ● you intended to work in Country X for several years; ● you did not intend on returning to Australia to live at any specific time in the future; ● you established your own accommodation in Country X; and ● you did not maintain a place of abode in Australia. Based on the information provided, it is considered that you were not residing in Australia during the time you were based in Country X. Therefore, you were not a resident of Australia under the resides test of residency. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, your domicile of origin is Australia and there is no evidence to suggest that you changed your domicile to Country X while you were based in that country. Therefore, you retained your Australian domicile during the time you were in Country X. | 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. Clearly, the longer an individual stays in any one particular place, the more permanent in nature is likely to be the stay in that place of abode. An individual's intention regarding the duration of the overseas stay and the actual length of the stay are significant factors in deciding whether they have set up a permanent place of abode. Although you ultimately spent only just over 12 months in Country X, you initially intended to stay there for several years; you established your own accommodation in Country X and did not maintain a place of abode in Australia. Consequently, the Commissioner is satisfied that your permanent place of abode was outside Australia during the period you were based in Country X. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You were not a resident of Australia under this test as you were not present in Australia for more than 183 days during the period you were in Country X. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You were not a resident under this test during the period you were in Country X. | Detailed Reasoning - Your residency status: You were not an Australian resident for taxation purposes during the period you worked in Country X.