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

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | Yes.

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 were born in country C and are a citizen of Australia and country C. You have a spouse. You and your spouse are intending to go on an extended overseas holiday for an extended period. You intend to travel to country C where you own a home. This home will be used as your base. From your base in country C you intend to undertake a number of trips. These trips will range short to long stays. You will enter country C under a country C passport. You do not intend to return to Australia during this holiday. Your assets in Australia consist of investment properties, car, superfund and your family home. Your family home will become a rental property upon your departure. All your household items will be placed in storage prior to your departure. Your overseas assets consist of your home in country C. You have no social or sporting ties in country C. Your social and sporting ties to Australia consist of a professional membership. You have never been an employee of the Commonwealth Government of Australia. You intend to write on your immigration outgoing card that you are leaving Australia for a holiday You intend to return to Australia after you have completed your holiday.

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

Reasons for decision: Detailed Reasoning - Residency: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are: • the resides test, • the domicile (and permanent place of abode) test, • the 183 day test, and • the superannuation test. The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia . The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. | 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 Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". When considering your residency status under the 'resides test', the contributing factor is that you intend only to travel overseas for a holiday. While it is acknowledged that your holiday will be for approximately 18 months and you will be based in your home in country C, during this period you intend to travel to a number of destinations overseas for extended periods. Given this pattern of behaviour the Commissioner is not satisfied that you will establish a settled or usual place of abode in the country C. Therefore you will remain a resident of Australia according to ordinary concepts under the 'resides test'. Accordingly, when you travel overseas for your holiday you will remain a resident of Australia for income tax purposes under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.