Private ruling: Residency for tax purposes
Published: October 2013
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Question and answer: | Are you a resident of Australia for the period you are in Country X? | Yes.

Relevant facts and circumstances: You were born in Australia and you are a citizen of Australia. You went to country X for work purposes a number of years ago. You have a sponsored employment visa for country X. You have an employment contract in country X. This contract is for a xx month period and can be extended for xx months at a time. You are not able to stay in Country X on your current visa when your current employment ceases. To be eligible to remain in country X beyond your current work contract you are required to apply for one of the following visas: · Tourist visa · Student resident visa · Investor resident visa · Employment visa · Employment contracting visa All of the above visas do not allow a foreigner the right to stay in country X on a permanent basis. All visas have restrictions around sponsors and duration of stay in Country X. Your employer supplies your accommodation as part of your work contract. You have xx days annual leave as part of your contract which must be taken in xx day lots. You return to Australia during your time off. Your employer provides you with air tickets back to your point of departure each year. You have an employer sponsored post box in Country X. Prior to leaving for country X you were a long term employee of company y in Australia. You were renting a property in Australia prior to leaving for country X. You have a wilderness block and cheque account in Australia. You have household items, personal belongings and numerous items relating to your hobbies in Country X. You have children and a sibling in Australia along with friends that you maintain contact with. You have numerous social connections in Country X. You have had your name removed from both the state and federal electoral rolls. You have notified Medicare that you are a non-resident. You stated on your out going passenger card that you were an Australian resident departing permanently. You put on your cards when arriving and departing Australia that you are a visitor temporarily entering Australia. You have not been a Commonwealth Government employee.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(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 test · the 183 day test · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: · Physical presence in Australia · Nationality · History of residence and movements · Habits and "mode of life" · Frequency, regularity and duration of visits to Australia · Purpose of visits to or absences from Australia · Family and business ties to different countries · Maintenance of place of abode. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In relation to this the AAT has stated that: Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home. You have gone to country X to work. You have xx days annual leave which your employer pays for air tickets back to your departure point. In recent court cases taxpayers were found to be residents of Australia for income tax purposes even though they had only spent a minimal period in Australia. In Iyengar v FC of T ( Iyengar's case ), it was indicated that there is a requirement that you at least be physically present in Australia for part of an income year. Further in this case it was considered that the taxpayer remained a resident of Australia for income tax purposes even though during the period he was working overseas (2 years and 7 months) he had only returned to Australia for a two week period and for a 10 day period. We consider that the above facts indicate that you will maintain continuity with Australia for the financial years included in this ruling. | Detailed Reasoning - Nationality: The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case. You are a citizen of Australia. | Detailed Reasoning - History of residence: You were a long term employee of company Y prior to taking up work in Country X. | Detailed Reasoning - Habits and "mode of life": The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. Prior to taking up work in Country X you lived with your family in Australia and had long term employment in Australia. You went to Country X on a sponsored employment visa which allows you to be present in Country X only for the duration of your employment. You return to Australia on your leave periods. Based on the above, we do not consider anything about your habits and mode of life during the financial years included in this ruling will be inconsistent with you being a resident of Australia for taxation purposes. | Detailed Reasoning - Frequency, regularity and duration of visits to Australia: Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country. Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia. You visit Australia on your time off. When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar's case also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not of itself exclude an individual from being a resident in the country visited. Further, the taxpayer in Iyengar had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months and was also considered to be a resident of Australia for income tax purposes. Considering the above, we do not consider the duration of your return trips to Australia is sufficient to preclude you from being considered a resident of Australia for taxation purposes in each of the income years included in this ruling. | Detailed Reasoning - Purpose of visits to or absences from Australia: You travel to country X for work purposes. You visit Australia on your time off and your employer provides air tickets back to your point of departure. | Detailed Reasoning - Family and business ties to Australia and the overseas country or countries: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. | Detailed Reasoning - Family: Your children and sibling remain in Australia. It is significant that in the recent decisions regarding the residency status of persons working overseas, including Beizuidenhout ,../../../uca53/Local Settings/Temporary Internet Files/Sam Lee ruling (3).doc - _ftn17#_ftn17#_ftn17#_ftn17 Case 5/2013 , and Iyengar , the taxpayers both had family residing permanently in Australia. There is particular emphasis placed in these decisions on the taxpayers' Australian residence being the 'family home'. The Macquarie Dictionary defines 'family' as: · parents and their children, whether dwelling together or not. · one's children collectively. · any group of persons closely related by blood, as parents, children, uncles, aunts, and cousins. Consistent with the findings in ../../../uca53/Local Settings/Temporary Internet Files/Sam Lee ruling (3).doc - _ftn17#_ftn17#_ftn17#_ftn17 Case 5/2013 ../../../uca53/Local Settings/Temporary Internet Files/Sam Lee ruling (3).doc - _ftn18#_ftn18#_ftn18#_ftn18 and Iyengar , and the definition of family provided by the Macquarie Dictionary the fact that your children and sibling will continue to permanently reside in Australia indicates the strength of your family ties to Australia. Your family ties in Australia are strong and you intend to visit them in Australia on a regular basis. | Detailed Reasoning - Business or economic ties: You have work in country X on a xx month contract which can be extended. | Detailed Reasoning - Assets: You have a wilderness block and a cheque account in Australia. You have household affects and personal items along with items relating to your hobbies in Country X. Your case is simular to the taxpayer in the Iyengar case where the taxpayer was found to be a resident of Australia for tax purposes. In that case the taxpayer did not purchase substantial property whilst overseas, but retained assets in Australia. | Detailed Reasoning - Maintenance of Place of abode: The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. You have not maintained a home in Australia and live in employer provided accommodation in Country X. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. There are several factors outlined above which indicate that you have not ceased to be a resident of Australia. Specifically: · You are on an employer sponsored visa which does not allow you to stay in Country X beyond your employment. · You live in employer provided accommodation in Country X. · You return to Australia during your time off work in country X. · Your children and sibling are in Australia. Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the relevant period.