Private ruling: Residency for taxation purposes
Date of advice: 24 June 2015
Published: June 2015
Ruling period: 1 July 2011 to 30 June 2016.
Date scheme commenced: February 2012.

Ruling: Question and answer: | Will you be a resident of Australia for taxation purposes from date A until date B? | No.

Relevant facts and circumstances: You are an Australian citizen. Your domicile is Australia. On date A you moved to overseas to work. You intend to reside overseas indefinitely. You have retained a home in Australia but this is not available for your use. You have returned to Australia on several occasions for short periods for personal and family matters. When you return to Australia you stay in hotels, or with your siblings or parents. You take your holidays in overseas destinations. You have a contract of employment that expires on date B. You have secured long term accommodation overseas and intend to continue living in this accommodation. Your mail is redirected to your overseas address. You advised your Australian bank you were leaving Australia and have provided your overseas address to your bank. You have deregistered from the Australian Electoral Roll. You have cancelled your Australian Private Health Insurance and are now covered by an international health cover policy. You are no longer a member of any community or sporting organisations in Australia. You use a gym and related facilities in the overseas country you live in. The Commonwealth superannuation test does not apply to you.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 Section 6(1).

Reasons for decision: Detailed Reasoning - Assessable income and residency for taxation purposes - general: Under Australia's tax law an individual who is a resident of Australia for taxation purposes is assessable on all their ordinary income, such as salary and wages from employment, from all sources in or out of Australia. | Detailed Reasoning - Residency for taxation purposes: 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 (and permanent place of abode) 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 for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, 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 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 it's 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". Based on the facts of your case, the Commissioner considers that you have not resided in Australia according to the ordinary meaning of the word since date A. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is Australia will be 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. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. Because you have an Australian domicile you will be a resident of Australia under this test unless the Commissioner is satisfied you have a permanent place of abode outside Australia. Taxation Ruling IT 2650 - Income tax: residency - permanent place of abode outside Australia specifies that a 'permanent place of abode' does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives. In essence, Taxation Ruling IT 2650, specifies that a person's place of abode is where they live and is a question of fact to be determined in the light of all the factors a particular case Based on the facts you have provided, the Commissioner is satisfied you have had a permanent place of abode overseas since date A. | 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. Given the periods of time you have been in Australia since leaving, this test does not apply to you. | Detailed Reasoning - The superannuation test: The Commonwealth superannuation test does not apply to you. | Detailed Reasoning - Conclusion - your residency status: You have not satisfied any of the tests of residency since date A and will not be a resident of Australia for taxation purposes from that time until your current employment contract expires on date B. Accordingly, you will not be assessable in Australia on your salary and wages from employment overseas in that time.