Private ruling: residency
Published: December 2011
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Question and answer: | Are you a resident of Australia for taxation purposes? | Yes.


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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. Subsection 995-1(1) of the ITAA 1997 defines an Australian resident as a person who is a resident of Australia for the purpose 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: 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'. 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. In your case you left Australia to work overseas. You are therefore not residing in Australia according to ordinary concepts and you are not a resident of Australia for tax purposes according to this test. | Detailed Reasoning - The domicile test: If a person has 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. Domicile There are essentially 3 types of domicile that an individual can have: § the domicile of origin; § the domicile of choice; and § the domicile of dependency. Basically, the domicile of origin of an individual is where the individual was born. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. You were born overseas and you are a citizen of an overseas country. Your domicile of origin is the overseas country. You came to Australia on a permanent visa. Your family has joined you in Australia. Your domicile of choice is therefore Australia. As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. Permanent place of abode 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. In your case: § you arrived in Australia on a permanent migration visa § you have a home in Australia which you return to when you come back to Australia § you spouse and children live in Australia § you make frequent trips back to Australia to visit your family § you work in an overseas country § you have a house in the overseas country that you live in when you are working § the house in the overseas country belongs to your parents The Commissioner is not satisfied that you have established a permanent place of abode overseas. You went overseas for work purposes. You have made a choice to work outside Australia. Your behaviour prior to working overseas was consistent with someone who wanted to live in Australia permanently. You choose to return to Australia each month to spend time with your family. You are a resident under this test. As you are a resident of Australia for taxation purposes under the domicile test it is not necessary to consider the 183 day and superannuation tests. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes under the domicile test. As a resident of Australia for taxation purposes you are required to declare all your income derive both in and outside Australia in your Australian tax returns.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You were born in overseas. | You have a permanent visa for Australia. | You left Australia a few years ago to work. | Your family joined you in Australia a couple of years ago. | You returned to Australia at least once a year for work purposes. | You spend a few days each month with your family in Australia. | You have a house in Australia where your spouse and children live. | Neither you nor your spouse are currently or have ever been Commonwealth government employees.