Private ruling: Residency
Date of advice: 8 July 2015
Published: July 2015
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Will you be a resident of Australia after your spouse and children relocate to Australia? | No.

Relevant facts and circumstances: You are an Australian citizen. You are a non-resident of Australia for tax purposes. You left Australia several years ago to live and work in country X. You lease your own accommodation in country X and reside with your spouse and children. Your spouse and children intend to relocate to Australia so that your children can continue their education here. Your spouse and children will live in the house you own in Australia that is currently being rented out. You will remain in country X for the time being. Your assets in Australia include two properties, household effects (in storage) and two bank accounts. You have credit card and mortgage facilities in Australia. You will be remitting funds from your salary to Australia to support your family, and pay your mortgages. Your assets in country X include motor vehicles, bank accounts and household furniture. You are a member of a club in country X. You do not intend to spend more than four weeks a year in Australia after your family relocates here. You are not on the Australian electoral roll. You lodge income tax returns and pay tax in country X. Neither you nor your spouse is an employee of the Australian commonwealth government.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision: Summary: 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. The tests are: • the resides test, • the domicile (and permanent place of abode) test, • the 183 day test, and • the superannuation test. 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 your case, you have been living with your family in country X for several years and are a non-resident for tax purposes. As a non-resident, you have broken your association or connection with Australia. Although your family will relocate to Australia and renew their association and resident status, you will remain in country X. In these situations, the residency status of you and your family are looked at independently from each other. As such, you will still be considered to be residing in country X until you return to Australia permanently. Therefore, you will not be a resident of Australia under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, although you have relocated to country X for a period of time, there is no evidence to suggest that you have taken steps to change your domicile to country X. Therefore, your domicile is still Australia. | Detailed Reasoning - Permanent place of abode: 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. In your case, you currently have a permanent place of abode overseas and this will continue to be the case after your family relocates to Australia. Therefore, you will not be a resident under this test. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days or more during an income year may be considered 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 will not be a resident under this test as you will not be in Australia for 183 days or more while you are based in country X. | Detailed Reasoning - Superannuation test: Based on the information you have provided, this test is not relevant in your situation as it only applies to persons eligible to contribute to certain superannuation funds for Australian government officers, their spouses, or their children under the age of 16 years.