Private ruling: Residency
Published: March 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

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

Relevant facts and circumstances: You were born in Australia and you are a citizen of Australia. You are currently on leave from your usual employment. You are going overseas for a period. You are being paid a stipend to cover your expenses. Your visit overseas is mainly for work but you will visit other institutions to attend conferences and you will have a number of weeks leave at the end of your contract. You do not intend to live overseas on a permanent basis. You will not return to Australia for any period during your time overseas other than for emergencies. You are renting an apartment overseas. You have a bank account overseas for day to day living requirements. Your partner has accompanied you overseas. You rent a home with your partner in Australia and this is being sub let for the period you are overseas. You have bank accounts, investments and properties in Australia. Your contract cannot be extended and you have no intention on extending it if it were offered to you. 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). | Income tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 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. 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 considered to be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: 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'. You have gone overseas to work for a number of months. You intend to return to Australia at the end of the contract. Your stay overseas is for a short period of time and you have no intention of living and working overseas on a permanent basis. You have gone overseas for a specific reason being for work and will return at the end of your contract. For the period you are overseas you are still residing in Australia according to ordinary concepts and are there fore a resident under this test as your usual and settled place of abode is in Australia. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Your domicile of origin is Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. You have gone overseas for work purposes for a short period of time. You are renting an apartment overseas. You are sub letting your Australian rental property for the duration of your stay overseas. You do not intend to live on a permanent basis overseas and will return at the end of your work contract. Based on these facts, the Commissioner is not satisfied that you have established a permanent place of abode overseas. You are therefore a resident of Australia under this test. As you are a resident of Australia for taxation purposes under both the resides and domicile tests it is not necessary to consider the 183 day test and the superannuation test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period you are overseas.