Private ruling: Residency
Published: December 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

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

Relevant facts and circumstances: Your country of origin is country X, and you are a citizen of country X and Australia. You moved to Australia and became an Australian citizen over 30 years ago. You returned to country X to care for an elderly relative. It was expected at the time that the relative did not have much longer to live and you did not anticipate having to stay in country X for a long time. Your relative was admitted to a permanent residential care home during the last year. You were receiving a country X carer's allowance which ceased when your relative entered the care facility. You have not worked in country X and currently do not derive any income in country X. You are living in your relative's home in country X. You consider that Australia is your home and you will return here after your relative passes away. You have no children or other family. Prior to leaving for country X you lived in the house you own in Australia. Your house is being rented out on an unfurnished basis through an agent. Some of your household effects have been sold and others are in a room in your house and a garden shed. Your tenants are looking after your pet while you are in country X. You pay tradespeople for maintenance to your home. Your assets in Australia comprise of the house you own, superannuation, bank accounts, a car in storage and some household effects. You have an Australian credit card with no debt. You returned to Australia for 28 days during the last income year in order to touch base with your 'home town' and friends. In Australia you have a large group of friends and are a member of performing arts groups. Your assets in country X comprise of a car and bank accounts. In country X you have joined performing arts groups. You did not advise the Australian Electoral Office to have your name removed from the electoral role; however, it appears your name has been removed without your advice. You have not advised any Australian financial institutions you have dealings with that you are a foreign resident as you do not consider yourself to be one. Your Medicare has card expired and when you applied for a new card during your last Australian visit you were advised to apply again when you returned to Australia for good.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | 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' and 'permanent place of abode' test; · the 183 day test; and · the Commonwealth superannuation fund 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 it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), 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'. In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: · 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 with Australia compared to the foreign country concerned; and · maintenance of a place of abode. The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your 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 Joachim v Federal Commissioner of Taxation 2002 ATC 2088 , the Tribunal stated (at 2090): 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 . In your case, you established a home in Australia and later returned to country X to care for an elderly relative. In the last income year you only spent a month or less in Australia when you made a return visit. The brevity of your visit does not preclude you from being an Australian resident as no one single factor is necessarily decisive, as mentioned above. The test is, whether you have retained a continuity of association with a place in Australia, together with an intention to return to that place and an attitude that the place remains home. | Detailed Reasoning - Nationality: Your country of origin is country X; however, you moved to Australia and became an Australian citizen. | Detailed Reasoning - History of residence and movements: You lived in Australia for many years before you returned to country X to care for your relative. | Detailed Reasoning - Habits and 'mode of life': You have been caring for your relative in country X and have been living in their home. You have purchased a car and opened bank accounts in country X and have joined performing arts groups. At the time you left for country X you had developed a large group of friends in Australia and were, and still are, a member of performing arts groups. You caught up with friends during your return visit to Australia. | Detailed Reasoning - Frequency, regularity and duration of visits to Australia: When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 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. In the last income year you made one return visit to Australia for a period of a month or less duration. | Detailed Reasoning - Purpose of visits to and absence from Australia: The purpose of your absence from Australia is to look after your relative in country X. You will return to Australia after your relative passes away. The purpose of your return visit to Australia was to touch base with your home town and friends. | Detailed Reasoning - Family: Your only other family member is your relative who resides in country X so you have stronger family ties to country X than Australia. | Detailed Reasoning - Business or economic: You are receiving rental income from your Australian house and interest from your bank deposits. You are receiving interest from your country X bank accounts. You have stronger economic ties to Australia than country X. | Detailed Reasoning - Assets: Your assets in Australia comprise of the house you own, superannuation, bank accounts, a car in storage and some household effects. Your assets in country X comprise of a car and bank accounts. You have stronger financial ties to Australia than country X. | Detailed Reasoning - Maintenance of a place of abode: You have a home in Australia that is currently rented out and contains your pet and some household effects. You will return to your home after your relative passes away. You are currently living in your relative's home in country X which is a place of abode that is not legally maintained by you. | Summary: In your case, although you were physically absent from Australia for the majority of the relevant income year, there are various factors that indicate that you did not cease to be a resident of Australia. These are primarily: · you left Australia for a temporary period of time and always intended to return here after your relative passed away; · you have a home in Australia that you intend to live in when you return; · you have stronger financial ties to Australia than country X; and · you did not make any arrangements to have your name removed from the Australian electoral role, cancel Medicare or notify the financial institutions you deal with that you were a foreign resident. You established a home in a place in Australia and have retained a continuity of association with that place together with an intention to return to that place and an attitude that the place remains home. Therefore, you were residing in Australia according to the ordinary meaning of the word and will be a resident under the 'resides' test of residency for the relevant income tax year. As you are a resident under this test, it is not necessary to determine whether you meet the requirements of any of the other tests of residency.