Private ruling: Residency
Published: October 2014
Ruling period: Year ended 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you an Australian resident for taxation purposes? | A1: No

Relevant facts and circumstances: You are a citizen of Australia. You migrated from Country X to Australia. You took up a leading position in Country Y in 200X. In 20XX, you were reappointed. The contract is for five years. Your employer has also issued an offer of a further five years in a post-tenure contract. You intend to accept the post-tenure position when it is offered. You hold an employment pass from County Y valid until 20YY which entitles you to live and work in Country Y. It also allows you to enter the country in the same fashion as the locals rather than being subjected to passport controls. This pass will be renewed. You are a cofounder of organisation C and are one of two directors of organisation C. The organisation is funded by a number of government grants. Retention of existing funding is dependent on you retaining your position as director. You also hold another position at organisation C. The second period of tenure ends in 20ZZ. Since the 20VV tax year, you have spent significantly reduced time fulfilling your roles organisation C and since the 20XX tax year, less than 30% of your work time has been spent in relation to your Australian roles some of which are done by correspondence from Country Y. When you travel to Australia for work, you occasionally stay in the house you jointly own with your spouse, or in hotels when holidaying or attending conferences. You have declined the offer of an extended tenure at organisation C. Whilst, some contractual arrangements between you and the organisation may continue, there will be little if any need for you to return to Australia for this purpose. You are in the process of winding down your involvement by; • Not accepting reappointment when your current tenure ends; • Appointing deputy directors of organisation C since 20WW; • Ensuring all new funding for organisation C is not tied to your position as director; • Notifying management at organisation C that you will step down as co-director. Your spouse often travels to visit you in Country Y. Your spouse did not accompany you to live in Country Y because they are a professional and are independently employed to work in Australia, Country X and the Country Z. You have independent children who remain in Australia. You have no definite plan to return to Australia after the post-tenure expires. You took most of your valuable personal effects with you to Country Y. Utility bills have always been in both your spouse and your name. Your spouse attends to these without consultation with you. Your spouse also manages the domestic affairs and pays for much of the upkeep through their own earnings. Your organisation C's salary is used for entertainment and holiday expenses with your family and is also used for insurance cost on the house, your spouse's car insurance policies. These policies were set up years ago and are an ongoing direct debit. You have been unable to find time to attend to making changes. You send money to Australia as gifts of love and affection to cover certain expenses, particularly the university fees for your children. In Country Y, you live in a apartment that you pay for yourself. You intend to continue living in the apartment until at least 2021. You have obtained a Country Y driving licence which is valid until 2017. You have purchased a car in Country Y. You maintain a bank account in Country Y into which your salary from organisation C is paid. In Australia, you own your place of residence and a car. You have social connections in Australia. You have social and sporting connections in Country Y. You and your spouse were not employed by the Commonwealth of Australia.

Relevant legislative provisions: Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Summary: Generally 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 within the tax provisions and provides four tests to ascertain the residency status. Relevant to your situation are the first two tests which are examined in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia, a copy of which is available from www.ato.gov.au. Given regard to your circumstances as a whole and a consideration of the relevant residency tests, it is accepted that you are not a resident of Australia from 1 July 2011.