Private ruling: Residency for taxation purposes
Date of advice: 5 June 2018
Published: August 2018
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Were you a resident of Australia for taxation purposes for the 20XX financial year? | A1: Yes | Q2: Were you a resident of Australia for taxation purposes for the 20XX financial year? | A2: No | Q3: What date are you considered to have ceased being an Australian resident for tax purposes? | A3: May 20XX | Q4: If you extend your leave of absence from your current employer in Australia beyond the current expected return date, will this mean you continue to be a resident of Australia for tax purposes? | A4: No

Relevant facts and circumstances: You were born in Australia. You lived in Australia until you moved to Country A early 20XX. Before moving to Country A you were living in a share house and working at Employer A You took a leave of absence from Employer A starting on mid 20XX and which is due to finish on mid 20XX. Prior to leaving for Country A you applied for a Country A Visa. The application was approved on the late 20XX and you officially became a resident of Country A late 20XX. You commenced employment with your current Country A employer late 20XX with a fixed term contract due to expire on early 20XX, the contract may be extended or potentially lead to permanent employment. You cancelled your return ticket to Australia after you were granted permanent resident status in Country A. You are currently living with your partner and have purchased household items to furnish your apartment. You maintain bank accounts in Australia. You have not notified the Australian Electoral Commission that your name should be removed from the Electoral roll. You have lodged a tax return in Country A as a resident for tax purposes. You have not returned to Australia since moving to Country A. You do not intend to return to Australia.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation 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 (and permanent place of abode) 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. 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 (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 Taxation Ruling IT 2650 Income tax: residency – permanent place of abode outside Australia 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. In your case, you left Australia on the mid 20XX and have not returned and do not intend to. You have applied for, and received, permanent residency of Country A, are living in an apartment with your partner which you have furnished and are currently employed by a Country A business with the potential to become permanent. Your “mode of life” in Country A is that of someone who is living there with the intention of remaining as a resident while establishing personal and economic ties to Country A rather than living there as a tourist or visitor. Based on the facts, you are not residing in Australia according to ordinary concepts from mid 20XX. Therefore, you are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - The domicile (and permanent place of abode) test: Under this test, a person whose domicile is Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice 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. The Commissioner is satisfied that you have a permanent place of abode outside of Australia for the following reasons: ● You have made a deliberate effort to change your domicile to Country A ● You have a permanent home with your partner ● Your intention is to remain in Country A indefinitely You are a not a resident of Australia for taxation purposes under this test from mid 20XX. | Detailed Reasoning - The superannuation test: The superannuation test is the third statutory test. This test covers current Australian government employees and states you are a resident if you are a member of the superannuation scheme established under the Superannuation Act 1990 or an ‘eligible employee’ for the purposes of the Superannuation Act 1976. As you are not an eligible employee you are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - The 183 day test: As you have not been in Australia for 183 days or more within the 20XX financial year you are not a resident of Australia for taxation purposes under this test for the 20XX year, however you will be a resident for part of the 20XX financial year. | Detailed Reasoning - Conclusion – your residency status: Based on the facts you have provided, you were a resident of Australia for tax purposes under the tests of residency outlined in subsection 6(1) of the ITAA 1936 until you left Australia mid 20XX and became a non-resident for taxation purposes from that date.