Private ruling: Residency
Date of advice: 28 November 2017
Published: April 2018
Ruling period: Income year ended 30 June 2017.
Date scheme commenced: 1 July 2016.

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

Relevant facts and circumstances: General You were born in Australia. You are an Australian citizen. You are not a citizen of any other country. You have not been granted permanent residency by any country. You departed Australia. Your destination overseas was a foreign country: ● You arrived there on X. ● Your purpose was employment. ● You entered a foreign country on a visa. ● This visa does not allow you to stay permanently; it must be renewed every two years. Your visa was supplied by an employer. You returned to Australia after first leaving. You travelled alone. The purpose of your visit was to visit family. You informed the Australian Electoral Commission but not Medicare that you were departing Australia. You advised your private health insurance provider to have your policy suspended. When completing incoming and outgoing passenger cards, you stated as your residency status you are a foreign country resident. Accommodation Your overseas accommodation in a foreign country is rented. Your overseas employer provided you with accommodation for the first few weeks of your arrival a hotel. This accommodation was rented under your employer’s name. You had exclusive use of it. Prior to leaving Australia you lived with family. Assets Household effects (furniture, TV) belong to your family. Your personal effects (clothes, laptop, photos, games & music on laptop) were taken to a foreign country. You receive income from and Australian sources: half share interest earned on a bank savings account, joint with a relative. You have not advised any Australian financial institutions including any Australian companies with whom you have investments with that you are a foreign resident so that non-resident withholding tax can be deducted. You acquired assets while overseas: ● Bank accounts: checking and savings accounts. ● Motor vehicle. ● Household effects: furniture - bed, table, chair. You have lodged a tax return in a foreign country. The residency status on a foreign country tax return was entered as Resident Alien. Family and social connections You do not have a spouse. You have no dependents. Your parents are employed in Australia and you have a sibling studying in Australia. You did not maintain any professional, social or sporting connections with Australia. You established a sporting connection in a foreign country: membership of a club. You obtained an overseas qualification: a driver’s licence. You did not maintain any professional or occupational memberships in Australia. Employment Regarding your employment overseas: ● You are an engineer. ● You have been employed from your arrival in the foreign country to the present and on-going. ● Your employment can be extended. You expected it to be extended beyond the current visa renewal for as long as you wish to work at the company. You have never been employed by the Commonwealth of Australia. You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990. You are not an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976. You are not the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS. You do not have a position or job being held for you in Australia.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | 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 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”. Based on the facts of your case, the Commissioner accepts that you were not residing in Australia according to the ordinary meaning of the word in the period of the ruling. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied the person’s permanent place of abode is outside Australia. A person’s domicile is generally their country of birth. This is known as a person’s ‘domicile of origin’. A person’s domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. In your case, as you remained an Australian citizen while living in a foreign country, your domicile is Australia and remained unchanged. However, your association with a foreign country is considered more significant than with Australia for the following reasons: ● You have been living and working in a foreign country and intend continuing to do so. ● You live in accommodation you have rented in the foreign country and for which you have purchased furnishings. ● You have moved your personal belongings into this dwelling from Australia. Based on these facts, it is considered that, while your domicile is Australia, the Commissioner is satisfied that you have established a permanent place of abode in the foreign country. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You returned to Australia for a short period. You travelled alone to visit family. You were not in Australia for more than 183 days in the period of the ruling. You were not a resident of Australia for taxation purposes under this test for the period of the ruling. | Detailed Reasoning - Superannuation test: Based on the facts you have provided this test is not relevant in your situation as it only applies to persons eligible to contribute to the superannuation funds for Australian government officers, their spouses, or their children under the age of 16 years. | Detailed Reasoning - Conclusion – your residency status: Based on the facts you have provided, you did not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period of the ruling. Accordingly, you were not a resident of Australia for taxation purposes during that time.