Private ruling: Residency
Date of advice: 20 December 2016
Published: May 2017
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20XX
Date scheme commenced: 1 July 20WW

Ruling: Questions and answers | 1. Are you a resident of Australia for income tax purposes from the date of your permanent departure from Australia? | No. | 2. Will your unexpected return to Australia after 12 months change the outcome of question 1? | No

Relevant facts and circumstances: You are an Australian citizen. Your extended family are in Australia. Your employment contract is for a permanent local role in Country A. Consequently the contract had no fixed end date. You initially travelled to Country A in late 20WW to familiarise yourself with the Country A business, as well as to begin the relocation process. Later in 20WW your spouse and child travelled to Country A to help you with the relocation process. Your child is under school age. At the end of 20WW you signed a 2 year rental agreement for an apartment in Country A. You used the majority of your savings to purchase new furniture and household articles to furnish the apartment. After you signed the lease you and your family returned separately to Australia to undertake the final arrangements for the move to Country A. Your intention at the time of departing Australia was to live and work in Country A for more than two years. You intended to spend two years on a project with your employer, after which time you intended to reassess your options base on other employment opportunities in Country A with your employer. Your accrued Australian leave was paid out at the time of the transfer of your employment except for your long service leave. This was being held by your previous Australian employer under an Australian agreement as you were 2 weeks short of being eligible for long service leave. Your spouse resigned from their Australian employment. You and your spouse cancelled your gym memberships in Australia. Prior to leaving Australia you closed all your surplus Australian bank accounts. You suspended your personal Australian private health insurance following your departure from Australia. You terminated the lease on your car and sold it. You own a property that was your main residence when you were living in Australia. You disposed of your surplus personal effects prior to leaving Australia. No assets were put into storage. You have a bank account in Australia which is relatively inactive used primarily for maintaining your property. The property was made available for rent at the time of your departure from Australia. The property was managed by an agent. At the start of 20XX you entered into a 12 month rental agreement for the property. After 10 months the tenants advised that they would need to break the lease early as they were moving overseas. There were significant financial penalties for breaking the lease early. The tenants moved out of the property after 10 months. When you applied for this ruling the property was still on the market for rent. You, your spouse and child departed Australia at the beginning of 20XX for Country A so you could commence your employment. You initially resided in employer supplied accommodation while waiting for your new furniture to be delivered. You are now residing in a rented apartment in Country A with a two year lease in your own name. You have employed a live-in domestic helper on a 2 year employment contract which commenced 2 months after you arrived permanently in Country A. You are on a Country A employment work visa. You have two bank accounts and two credit cards in Country A. You are paid monthly by your employer directly into a Country A bank account. You and your family travelled to two other nearby countries for short family holidays in the first quarter of 20XX. Your spouse and child returned to Australia around Easter to enable your child to seek and receive medical treatment. You returned to Australia 2 weeks later to attend a family celebration. During the visit you stayed with extended family. Your family returned to Country A with you after Easter. Your spouse commenced casual employment at in Country A later in 20XX. In late 20XX you were advised by your employer that the project you are working on has been reduced in scope and as a result the project's end date has been brought forward from 20ZZ to early 20YY. Consequently you will be released from your employment in Country A at the end of the project. You have been advised that other projects your employer has in the Country A region are also closing shortly due to unfavourable market conditions. Your employer is likely to leave the Country A market. Consequently you are considering returning to Australia with your spouse and child. Later in 20XX your spouse and child travelled to Australia for a holiday staying with extended family. Neither you or your spouse or child is a member of a superannuation scheme established under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976 .

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

Reasons for decision: Summary: 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 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. Based on the facts you have provided and for the reasons you have given, we can conclude that you will not satisfy any of the tests of residency from early 20XX. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 you're your departure from Australia in early 20XX.