Private ruling: Residency
Published: August 2013
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You are a citizen of Australia. You were born in another country. You have employment overseas for a number of years. You and your family will move overseas for the duration of your work contract. You intend on returning to Australia at the end of your work contract. Your employer will supply and pay for your accommodation overseas. Your utilities will be paid for by your employer. All your belongings in Australia have been transported overseas at the expense of your employer. You will leave your family home in Australia vacant for the duration of your stay overseas. You will return to your family home to live when you return from overseas at the end of your work contract. You will live in the family home in Australia when you return on holidays. Your return trips back to Australia will be paid for by your employer. You will return each year up to twice a year for no more than x weeks to attend to your house and banking or ATO requirements. Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(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: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and "mode of life" (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) 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 no one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - (i) 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 moved overseas for work purposes and your family has accompanied you for the duration of the work contract. You intend on returning to Australia to live at the end of the work contract and will live in your family home when you return. Although you will not be physically present in Australia for the majority of the time you are working overseas, you have a place in Australia that you intend to return to and that you consider your home. | Detailed Reasoning - (ii) 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 an Australian Citizen. | Detailed Reasoning - (iii) History of residence: Although you were born in another country, you are now a citizen of Australia. The dwelling that you consider 'home' is located in Australia. | Detailed Reasoning - (iv) 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. You have gone overseas for work purposes. You will live in employer provided accommodation with your family overseas. | Detailed Reasoning - (v) 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 will make no more than a couple of trips paid for by your employer back to Australia during your work contract. These trips will be for no more than x weeks. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: You will be absent for a number of years to work overseas. | Detailed Reasoning - (vii) 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 family accompanied you overseas. You intend on returning back to your family home in Australia to live at the end of the work contract. | Detailed Reasoning - Business or economic ties: You lived and worked in Australia before you left for overseas. | Detailed Reasoning - Assets: You have a home in Australia which you will return to. | 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 a home in Australia which you are not renting out for the duration of your work contract. You will return to this home during your holidays and at the end of the contract. | Summary: As stated above it is important that no 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 only intend to be overseas for the period of your work contract. · You went overseas for work purposes. · Although you will not be physically present in Australia for the period (except for annual holidays) you have a place in Australia that you intend to return to and that you consider your home. 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. As you are a resident of Australia under this test, you are a resident of Australia for tax purposes under subsection 6(1) of the ITAA 1936 for the period you are overseas. There is no need to consider the remaining tests.