Private ruling: Residency
Date of advice: 15 May 2017
Published: September 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No.

Relevant facts and circumstances: You are an Australian citizen and were born in Australia. You left Australia to work in a foreign country. You have a five year employment contract with your employer which may be renewed. You have a work visa which is reviewed annually but will continue to be renewed while you maintain your employment. Your employer has provided you with a fully furnished home. You are able to live at this address while you carry out your work duties. You have obtained a local drivers licence. At this time, you have no intention of moving back to Australia on a permanent basis. You do not have a spouse or children. You have parents who live in Australia. You employment roster is X weeks on and XY weeks off. After each X week work block, you are able to travel anywhere in the world at the expense of your employer. During each XY week period you are off work, you leave the foreign country and go on holidays. In the current income year, you have returned to Australia on two occasions to visit your parents and friends. On these visits, you either stayed with your parents, at a hotel or travelled to different places in Australia. You do not have any definite plans on when you will next visit Australia. You have a share in a rental property in Australia which is rented out to unrelated tenants on arm's length terms. You have a small portfolio of share investments and a small superannuation account in Australia. You have never been employed by the Commonwealth Government of Australia.

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 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 and permanent place of abode test ● the 183 day test ● the superannuation test. 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 test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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 Commissioner may make reference to the following factors in determining whether a taxpayer is 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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. In your case, there are various factors that indicate that you are no longer a resident of Australia, specifically: ● you left Australia to work in a foreign country for an expected period of five years; ● you currently have no plans to move back to Australia on a permanent basis; ● you have your own place of abode in the foreign country; and ● you do not have a place of abode in Australia. Based on the information provided, it is considered that you ceased residing in Australia from the time you left Australia to commence work in the foreign country. Therefore, you are not a resident of Australia under the resides test of residency. | 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. In your case, your domicile of origin is Australia and there is no evidence to suggest that you have changed your domicile to any other country. Therefore, you have retained your Australian domicile. | 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. Clearly, the longer an individual stays in any one particular place, the more permanent in nature is likely to be the stay in that place of abode. An individual's intention regarding the duration of the overseas stay and the actual length of the stay are significant factors in deciding whether they have set up a permanent place of abode. From the information provided it is evident that: ● you will living and working overseas for a substantial period of time; ● you have your own place of abode in the foreign country; and ● you do not have a place of abode in Australia. Consequently, the Commissioner is satisfied that your permanent place of abode is outside Australia. Therefore, you are not a resident of Australia this test of residency. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You will not be a resident of Australia under this test as you will not be present in Australia for more than 183 days during any of the relevant years of income. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a resident of Australia under this test. | Detailed Reasoning - Your residency status: You ceased to be a resident of Australia for tax purposes from the time you left Australia to work in the foreign country.