Private ruling: Residency and leaving Australia
Date of advice: 18 May 2016
Published: June 2016
Ruling period: Year ending 30 June 2016 | Year ending 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 from dd/mm/yyyy? | A1: No

Relevant facts and circumstances: You signed an employment contract to work overseas in mm/yyyy. You have relocated from Country X to Country Y. Your spouse has relocated permanently with you in Country Y on dd/mm/yyyy. Your employer is currently undertaking the process to obtain a work visa on your behalf, which should be received within two weeks from dd/mm/yyyy. Your employer has indicated that there are several other projects that they want you to lead, and due to this you expect to remain in Country Y indefinitely. You own a property in Australia jointly with your spouse, which is on the market for sale, and is under offer as at dd/mm/yyyy, subject to the purchaser selling their home. The property is also being shown to other potential buyers, with the view to sell as soon as possible. You have no intentions of ever returning to Australia to live. You have leased a property in Country Y in which to live. Your long term intention is to remain in Country Y to work for a significant period of time, prior to retiring and travelling to Country Z. Once your work visa has been issued, you will look at obtaining a local drivers licence. You intend on participating in local social activities in Country Y.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) and

Reasons for decision: Summary: 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 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • the resides test, • the domicile test, • the 183 day test, and • the superannuation test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | 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 not one single factor is decisive and the weight given to each factor depends on individual circumstances. You commenced work in Country Y on dd/mm/yyyy. Your spouse has relocated permanently with you in Country Y on dd/mm/yyyy. Based on these facts, you no longer have a continuing association with Australia and will no longer be a resident of Australia for taxation purposes as your spouse has now joined you permanently in Country Y. You are a non-resident of Australia for taxation purposes from dd/mm/yyyy. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. This intention needs to be demonstrated in a legal manner by way of becoming a permanent resident or citizen of another country, for example. 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. Your domicile of origin is Australia and this remains unchanged. However, the Commissioner is satisfied that you will not have a permanent place of abode in Australia for the following reasons: • Your spouse has joined you permanently in Country Y on dd/mm/yyyy. • You do not intend on returning to Australia to live • Your work contract is for an indefinite period • Your house in Australia is listed on the market and is under offer. You will therefore be a non-resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You will not be in Australia for more than 183 days during the relevant years. You are a non-resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You and your spouse are not eligible to contribute to the relevant Commonwealth super funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: Accordingly you are not a resident of Australia for income tax purposes from dd/mm/yyyy under subsection 6(1) of the ITAA 1936.