Private ruling: Residency
Date of advice: 5 August 2016
Published: September 2016
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Questions and answers | 1. Were you a resident of Australia for taxation purposes for the period when you were doing study in Australia? | Yes | 2. Were you a resident of Australia for taxation purposes from your date of departure after completing your study? | No

Relevant facts and circumstances: Your country of origin is the foreign country A. You are a citizen of the foreign country A. You first came to Australia for holiday in 19XX. You then came to Australia in 20XX and 20XX for holidays, you stayed in Australia for 1 month for each trip. You were holding a Tourist Visa (subclass 651) for each visit. You got married in 20XX. Your spouse is a citizen of Australia. You enrolled in Advanced Diploma study in Australia. Your course lasted 11 months in 20XX. You were holding a Student Visa during your study period. You did not work in any capacity during your study as your Student Visa did not allow you to work in Australia. You departed for foreign country A with your spouse after completing your course of study. You work for a company. The company you work for conducts no business within Australia or Australian Territorial water. Your salary is paid into your bank account in foreign country A. You lodge your annual income tax return in foreign country A. You own a real property in foreign country A. You treat your property in foreign country A as your principal and permanent place of residence. Your child was born in 20XX in Australia; you came back to Australia for your child's birth. You departed for the foreign country A shortly after your child's birth. Your spouse and child departed for foreign country A in 20XX; they stayed with you in your foreign country A property. You purchased a property in Australia in 20XX The property is jointly owned by you and your spouse. Your family moved into this property in 20XX, you left the house vacant when you were in foreign country A as your family use this property as a holiday house. In Australia, you have two bank accounts, one bank account is for the mortgage, and the other bank account is a standard savings account which is used to pay utility bills. You own a vehicle in Australia. You have not applied for a permanent residency visa or Australian citizenship as you have no intention to do it. You do not intend to reside in Australia permanently. You and your spouse are not Commonwealth Government of Australia employees for superannuation purposes.

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

Reasons for decision: Summary: Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation 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 taxation 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. | Detailed Reasoning - Question 1: for the period when you were doing study in Australia: Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia discusses the factors that are taken into account in assessing whether an individual is residing in Australia. As per TR 98/17, your behaviour whilst you were staying within Australia is used as an indicator as to your status of resident for the given period. The reason for you stay in Australia was to study your diploma. You were holding a student visa, your spouse was with you while you doing study. Given the circumstances as a whole and the relevant residency tests, it is accepted that you were a resident of Australia for taxation purposes for the period when you were doing study in Australia. | Detailed Reasoning - Question 2: from your date of departure after completing your study: As we mentioned, there are four tests to ascertain whether a taxpayer is a resident of Australia for taxation purposes and 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 its 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". In your case, you left Australia after completing your study; you did not come back to Australia until 20XX; the company you work for conducts no business within Australia or Australian Territorial water; you own a property in foreign country A and you treat your property in foreign country A as your principal and permanent place of residence. Based on the facts of your case, the Commissioner accepts that you were not residing in Australia according to the ordinary meaning of the word; therefore, you were not a resident of Australia for taxation purposes from your date of departure. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered 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. In your case, you are a citizen of the foreign country A; you have not applied for a permanent residency visa or Australian citizenship as you have no intention to do it and you do not intend to reside in Australia permanently. Therefore, we do not consider you an Australian resident for taxation purposes under the domicile test. | 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 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. You were not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - Superannuation test: A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees. You were not a resident of Australia for taxation purposes under this test as you are not employed by the Australian Commonwealth government. | Detailed Reasoning - Conclusion - your residency status: Based on the facts you have provided, you were a resident of Australia for taxation purposes for the period when you were doing study in Australia. As you did not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you were not a resident of Australia for taxation purposes from your date of departure after completing your study.