Private ruling: Residency
Date of advice: 17 March 2016
Published: May 2016
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2014

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

Relevant facts and circumstances: Your country of origin is a foreign country. You are a citizen of a foreign country. In the five years prior to your arrival in Australia you lived in a foreign country. You arrived in Australia. You entered Australia on a visa which grants you the right to remain permanently in Australia. Since your arrival in Australia, you have not applied for citizenship. Your usual place of abode is outside of Australia, in a foreign country. You do not intend taking up residence in Australia. Since first arriving in Australia you returned to a foreign country for a brief holiday. You had previously entered Australia. You are unsure of the exact dates. You are not migrating to, or settling in, Australia. You are not an Australian returning to live in Australia. Your main purpose for being in Australia is employment. You stayed or intend to stay in a particular place continuously for several months or more of the income year. Your employment commenced in Australia with a training course, during which time you lived in a short term, apartment accommodation. You live in shared accommodation comprising communal dining, living and socialising areas. You have a spouse who remains in a foreign country. Your spouse remains there to operate a business there. You do not have children. The majority of your assets are held in a foreign country. You are not a member of any clubs, churches, community groups or organisations in Australia. You have been in Australia, either continuously or intermittently, for 183 days or more in an income year. You have not lodged any foreign income tax returns while living in Australia. Your employment contract is solely for your services. You do not maintain any professional, social or sporting connections with a foreign country. In a foreign country you co-own and lived in a house with your spouse. While you live in Australia it is occupied by your spouse but is available for your use. You have bank accounts in a foreign country and in Australia. You do not receive any income from sources outside of Australia. While in Australia, you do not have an employment position or job being held for you in a foreign country. Regarding your employment in Australia: • your contract is for a fixed period • your contract can be extended but you have to reapply at the end of your current contract. You have never been a Commonwealth of Australia Government employee for superannuation (super) purposes.

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) 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 (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 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | 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. There are several factors outlined above which indicate that you have not ceased to be a resident of Australia, specifically: • Your country of origin is a foreign country. • You are a citizen of a foreign country. • In the years prior to your arrival in Australia you lived in a foreign country. • Since your arrival in Australia, you have not applied for citizenship. • Your usual place of abode is outside of Australia, in a foreign country. • You do not intend taking up residence in Australia. • You are not migrating and settling in Australia. • Your purpose for being in Australia is employment. • In a foreign country you co-own and lived in a house with your spouse. • While you live in Australia it is occupied by your spouse but is available for your use. • Your spouse remains in a foreign country to operate business there. Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you will not maintain a continuity of association with Australia for the period of the ruling. | Detailed Reasoning - The domicile and permanent place of abode 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. As you are still a foreign country citizen while living in Australia, your domicile is a foreign country and remains unchanged. | Detailed Reasoning - 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 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. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. As you have established a permanent place of abode in a foreign country, your presence there is not temporary in nature. The Commissioner is satisfied you have a permanent place of abode outside of Australia. Therefore, you are not a resident of Australia under the 'domicile and permanent place of abode' test of residency. | Detailed Reasoning - The 183-day test: Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. You have been in Australia, either continuously or intermittently, for 183 days or more in an income year. However, based on the facts, the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. Therefore you are not a resident of Australia under the 183-day test. | Detailed Reasoning - The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (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 is eligible to contribute to the PSS or the CSS. Further, you are more than 16 years of age. Therefore, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Your residency status: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes.