Private ruling: Residency for tax purposes
Published: December 2014
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 20XX

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period you were in Country Y? | No.

Relevant facts and circumstances: You were born in Country Z. You are a citizen of both Country Z and Australia. You accompanied your spouse to Country Y for work purposes. Your spouse had a work visa and work permit for Country Y which enables you to be in Country Y. Your spouse's position in Country Y was for an indefinite period and permanent. At the time you departed Australia your intentions was to leave Australia indefinitely and take up permanent residence in Country Y. You suspended your private health insurance in Australia. You closed various bank accounts and a credit card account in Australia prior to moving to Country Y. Your home in Australia was occupied by your child for the period you were in Country Y. You had bank accounts and credit card accounts in Country Y. You had kept some bank accounts in Australia for paying bills. On the outgoing passenger card you and your spouse marked the box that you were both leaving Australia permanently. You were not in Australia for more than 183 days for the period you were in Country Y. Your spouse's employer paid for your trips back to Australia that, were for work and personal purposes. When you and your spouse returned to Australia you stayed with family and friends and some of the time at your home occupied by your child. Your spouse's employer provided you with your accommodation in Country Y. You had sole use of the accommodation and were required to maintain the accommodation. You adopted a child from Country Z while you were living in Country Y and you did not apply for an adoption visa until you had decided to return to Australia. Your adopted child was able to enter Country Y on a visitor's visa until the child was able to stay in Country Y as part of your spouse's work visa. Your spouse received an offer of employment with a former employer in Australia and your spouse accepted this offer and you decided to return to Australia. You and your spouse returned to Australia along with your adopted child. Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

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

Reasons for decision: Summary: 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. 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • resides test • domicile and permanent place of abode test • 183 day test and • Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was 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. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. You were born in Country Z and you are a citizen of both Country Z and Australia. You and your spouse went to Country Y as your spouse got a job in Country Y. You went to Country Y for an indefinite period of time. You intended to take up permanent residency in Country Y. Your child remained in the family home in Australia. Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were in Country Y. | 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 a new domicile of choice in a country outside Australia has been adopted, the person must be able 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. Your domicile of origin is Country Z. Your domicile of choice is Australia. The Commissioner is satisfied that you established a permanent place of abode in Country Y for the following reasons: • You accompanied your spouse to Country Y for work purposes • You went to Country Y for an indefinite period of time • You intended to take up permanent residency in Country Y • You lived in employer provided accommodation in Country Y and you had sole use of the accommodation You were not a resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You were not in Australia for more than 183 days in any income year while you were living and working in Country Y. You were not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. Neither you, nor your spouse, have ever been Commonwealth Government employees. You are not a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident of Australia for taxation purposes for the period you were living and working in Country Y.