Private ruling: Residency
Date of advice: 7 June 2018
Published: August 2018
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: No

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y in the 2016 income year. Your spouse works for the Australian Government. Your spouse will continue their posting in Country Y until 2019. You are travelling on an official government visa which is for three years. You work in Country Y at the embassy. You commenced part-time work in Country Y in XX of 2016 and you commenced full-time employment in XXXX 2016. You have a child who also went to Country Y with you and your spouse. You rent accommodation in Country Y. You took personal items with you to Country Y. You do not have any property in Australia. You have a super fund in Australia and a bank account. You have returned to Australia since leaving in 2016 for short visits and you have not exceeded 183 days in Australia. You and your spouse are not eligible to contribute to the PSS or the CSS Commonwealth superannuation funds.

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 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. 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, we can conclude that you will not satisfy any of the tests of residency. 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.

ATO view documents: Taxation Ruling TR 98/17 – Income tax: residency status of individuals entering Australia | Taxation Ruling IT 2650 – Income tax: residency – permanent place of abode outside Australia | Taxation Ruling IT 2650A (Addendum) – Income tax: residency – permanent place of abode outside Australia | Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014): Federal Commissioner of Taxation v Miller [1946] HCA 23; (1946) 73 CLR 93. | Levene v Inland Revenue Commissioners [1928] UKHL 1; [1928] AC 217. | Applegate v Federal Commissioner of Taxation [1978] 1 NSWLR 126