Private ruling: Residency
Published: February 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and Answer: | Are you a resident of Australia for tax purposes from date X? | Yes.

Relevant facts and circumstances: You are an Australia citizen and Australia is your domicile of origin. You departed Australia on date X. Your spouse is a citizen of foreign country A and you are currently staying in the foreign country A on a spouse visa. The purpose of your visit is to pursue a research project in your capacity as an Australian university research fellow. The project is collaboration between the university and a not-for-profit organisation. Your current employment contract is for a specified period. You are planning to return to Australia. Your employment remains with the Australian university and your salary is paid into your Australian savings bank account. There is a secondment agreement between the Australian university and the non-profit organisation. It contains a specific clause that the organisation undertakes that it will not approach you with any offer of employment for a specified period. You have not visited Australia since you left. You are renting an apartment during your stay in the foreign country. You do not have any assets in the foreign country. You have not opened a bank account in the foreign country. You own an apartment in Australia. It is currently rented. You are planning to live in the apartment again when you return to Australia. You have a saving account and a home loan account with an Australian bank. All your superannuation benefits are in Australia. You own some shares in an Australian listed company. You contribute to an education fund in Australia on behalf your child. You are the main income earner in the family. Your family has accompanied you to the foreign country. Most of your relatives and friends remain in Australia. Your spouse has relatives living in Australia. Your spouse remains a member of a club in Australia. You and your spouse are not currently members of any sporting clubs or associations in the foreign country. Neither you nor your spouse has been employed by Commonwealth Government of Australia. You are more than 16 years of age. Relevant legislation provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) Income Tax Assessment Act 1936 Subsection 6(1)


Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. These tests are: · the resides test · the domicile test · the 183 day test · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia. 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 considered to be a resident of Australia for tax purposes if they satisfy 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'. Taxation Ruling IT 2650 provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay. The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states: The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes. In your case, you will be staying and researching in country X for only 12 months. You have rented accommodation for this period. The residence you own in Australia has been rented out for the period. You are only in country X for the purpose of research you are not intending to stay longer or reside in country X. Your stay in country X is solely for the purpose of your research as part of your Australian employment, Accordingly, you are 'residing' in Australia albeit you are temporarily absent from the country and, therefore, are a resident of Australia under the resides test during the period from mid 2012. | 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 an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case, as you were still an Australian citizen while living in the foreign country, your domicile is Australia and remained unchanged. 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. Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include: · the intended and actual length of the taxpayer's stay in the overseas country · whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time · whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia · whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence · the duration and continuity of the taxpayer's presence in the overseas country and · the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. In your case, during the period, you: · are staying and studying in the country X until late 2013 · have rented accommodation · have rented out the residence you own in Australia · have been accompanied by your spouse and child · your purpose in going to the country X is for temporary research Based on the above, the Commissioner is not satisfied that you established a permanent place of abode outside of Australia during your absence. Therefore, you were also a resident under the domicile test during this period. As you are resident under both the resides and domicile test there is no need to consider the other tests. | Detailed Reasoning - Conclusion: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to have been an Australian resident for taxation purposes during the period from date X.

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