Private ruling: Residency
Date of advice: 14 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | No.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y a number of years ago for work purposes. Your initial contract was for 18 months and was extended. Your spouse and children have accompanied you to Country Y. You intend on remaining outside Australia indefinitely. Since leaving Australia you have only returned to Australia twice. You have not exceeded more than 183 days in any financial year since leaving Australia and you do not intend on exceeding 183 days in any financial year in the future. You stay with family or in hotels when you return to Australia. Your home was being rented out while you were in Country Y and it has now been sold. You reside with your family in a compound in Country Y which you have occupied since first moving to Country Y and you intend on remaining in indefinitely. This accommodation is employer provided. You are required to pay for all of the day to day expenses such as running costs, appliances and linen. You are required to fund any improvements you make to the property and maintain these improvements. You have paid for a patio to be built. You sold your cars and paid out your mobile contracts when you left Australia. You have taken all personal items to Country Y. You have had all mail redirected to your country Y address. You have opened a country Y bank account. Your children are enrolled in day-care and the International school in Country Y. You have a driver's license for Country Y and a car registered in your own name. You have cancelled your Australian health insurance. You have removed your name from the electoral roll. Neither you nor your spouse are eligible to contribute to the relevant commonwealth super funds.

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 went to Country Y for work purposes a number of years ago. You have left Australia indefinitely. Your initial work contract was for 18 months and has been extended. Your spouse and children have gone to Country Y with you. You will only return for visits to Australia and will not exceed 183 days in any financial year. You have not exceeded 183 days in Australia in any financial year since leaving Australia. You have taken all personal items to Country Y. Your home in Australia has been sold. You stay in hotels and with family when you come back to Australia. Based on the facts above you are not residing in Australia according to ordinary concepts | 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. 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 Australia. The Commissioner is satisfied that you have a permanent place of abode outside Australia for the following reasons: • Your family has gone to Country Y with you • You have left Australia indefinitely • Your employer provides you with a home to live in while in Country Y • You have sold your home in Australia You are 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 will not be in Australia for more than 183 days in any financial year. You are 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. You and your spouse are not eligible to contribute to the relevant Commonwealth super funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes.