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

Ruling: Question and Answer: | Were you a resident of Australia for tax purposes for the period date A to date B? | No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a citizen of Country X. Your country of origin is Country X. You are in the process of obtaining Australian citizenship. Your spouse is an Australian citizen and her country of origin is Australia. Your spouse has a Country X passport and has dual nationality. You and your spouse have been living in Country X for a considerable length of time. You and your spouse visit Australia each year for less than 6 months. You do this for two reasons, firstly in order to avoid the weather conditions in Country X, and secondly to travel and visit different places in Australia. For the 2010-11 income year, you and your spouse spent over 6 months in Australia. You both arrived on date A and stayed until date B. Of this time, you both spent several weeks travelling in different parts of an Australia. You both spent the remaining months in one city in rental accommodation. You and your spouse are planning to spend 4-5 months in Australia over the next few years so that you can visit other countries in the world whilst you are still able to do so. You and your spouse are currently in Australia for less than 6 months, You and your spouse plan to retire in Australia. You and your spouse jointly own a flat in Country X which you rent to a restricted type of tenant when visiting Australia. You use the rental income to fund your travelling. You and your spouse live in rental accommodation in Australia. When travelling around Australia, you stay in hotels, motels, and holiday parks. Neither of you own a home in Australia. Your assets in Country X include a jointly owned flat with your spouse, a retirement fund and jointly owned investments. Your assets in Australia are a jointly owned rental property and jointly owned investments. Your relatives live in Country X. You do not have family members in Australia. Your spouse has a large family in Australia and also has relations in Country X. Your social and sporting commitments with Australia are a recreation club to which you belong. Your social and sporting commitments with Country X are a recreation club and an exercise club. You and your spouse have never been a member of a Commonwealth Government superannuation scheme

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

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (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: o The resides test o The domicile test o The 183 day test o 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 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 dictionary meaning, 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. Taxation Ruling TR 98/17 specifies that the period of physical presence in Australia and an individual's behaviour while present in Australia are important factors for the purpose of the resides test and may reflect a degree of continuity, routine, or habit that is consistent with residing here. Whether a considerable time has elapsed to demonstrate that an individual's behaviour has the required continuity, routine or habit is a question of fact and the Commissioner's view of the law is that six months is a considerable time when deciding whether an individual's behaviour is consistent with residing in Australia. When behaviour consistent with residing here is demonstrated over a considerable time, an individual is regarded as a resident for taxation purposes from the time the behaviour commences. In considering an individual's behaviour while in Australia, the Commissioner considers a number of factors, including: 1. intention or purpose of presence; 2. family and business/employment ties; 3. maintenance and location of assets; 4. social and living arrangements. Although you and your spouse may be contemplating moving to Australia to retire after some years, you are not a resident of Australia according to ordinary concepts as: On each visit to Australia, you and your spouse did not come with the intention to live here permanently. Your main purpose for visiting Australia is to avoid the weather conditions in Country X and to travel around Australia. You were born in Country X and are a citizen of Country X. Your family members live in the Country X. You and your spouse have spent a considerable amount of time in Country X. You do not have family members in Australia. You and your spouse jointly own a flat in Country X in which you live when you are in Country X. You rent it to a very restricted type of tenant when visiting Australia. You use the rental income to fund your travelling. When in Australia, you live in rental accommodation. When travelling in Australia you stay in hotels, motels, and holiday parks. You and your spouse do not own a home in Australia. Your assets in Country X include a jointly owned flat with your spouse, a retirement fund and investments. Your spouse has similar assets in Country X. For the 2010-11 income year, you and your spouse spent over 6 months in Australia. You both arrived on date A and stayed until date B. Of this time, you both spent several weeks travelling in different parts of Australia. You both spent the remaining months in one city in rental accommodation. You and your spouse have always spent less than 6 months in Australia (apart for the 2010-11 income year). You both plan to travel to overseas countries in the world over the next few years and thus plan to spend about 4-5 months in Australia. Your social and sporting commitments with Country X are a recreation club and an exercise club. Based on the above facts it is considered that you were not an Australian resident for taxation purposes for the year ended 30 June 2011 for the period date A to date B under the resides test as your behaviour in Australia has not reflected a degree of continuity, routine or habit that is consistent with residing here. | Detailed Reasoning - The domicile test: If a person is considered to have 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. In your case you are domiciled in Country X. This is your domicile of origin. In order to show that a new domicile of choice has been adopted, a person must be able prove an intention to make his or her home indefinitely in that country. You have not yet abandoned Country X or chosen another country as your permanent home. You have a permanent home in Country X. You live in temporary accommodation in Australia. Although you are in the process of applying for Australian citizenship, there is no evidence to indicate you have changed your domicile to Australia. As you have not changed your domicile from Country X to Australia, you are not an Australian resident under the domicile test. | Detailed Reasoning - The 183 day test: Under this test, a person is required to be actually present in Australia for a total period of more than half the year of income, unless it can be established that the person's usual place of abode is outside Australia and there is no intention to take up residence here. The test applies in relation to the relevant income year rather than a calendar year. In your case you were in Australia for more than one half of the year in the 2010-11 income year. However, your usual place of abode is in Country X. For the period date A to date B you and your spouse had no intention to take up residence in Australia. Each year you and your spouse have been visiting Australia for less than six months, apart for the 2010-11 income year when you both were here for more than 6 months. You are currently in Australia for a period of less than 6 months and plan to continue visiting for 4-5 months each year. Your usual place of abode is Country X as that is where you continue to live habitually. Accordingly you are not an Australian resident under the 183 days test, even though you were physically present here for over 183 days in the 2010-11 income year. | 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 Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. This test does not apply to you as you and your spouse have never been an employee of the Commonwealth Government of Australia. Your residency status from date A to date B For the period date A tod ate B, you were not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936. You were therefore a non-resident of Australia for taxation purposes for that period.

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.