Private ruling: Residency for tax purposes
Published: June 2012
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: Yes.

Relevant facts and circumstances: You are a citizen of Australia. You were born in Australia. You left Australia to go overseas a number of years ago. You went overseas to work. You intend to be overseas permanently. You return to Australia twice a year for about 4 weeks in total. You have a leased apartment overseas on a 12 month lease. You have shares and bank accounts overseas. You have a work visa for country Y. You have a temporary visa for country X which has tenure of 60 days which you renew. You work for a company in country Y. You work 28 days on and have 14 days off. You stay in employer provided accommodation. This position is a permanent position. You have sold your house in Australia. Your family leases a home in Australia. You have an investment property in Australia. You have a joint bank account in Australia with your spouse. Your spouse and child did not accompany you overseas. You financially support your family in Australia. You are not legally separated from your spouse. In effect you are separated in your opinion. Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6-1. | Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 995.

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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. These tests are: · the resides test · the domicile test · the 183 day test · the superannuation test | Detailed Reasoning - 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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'. In your case you started working overseas a number of years ago. Your family remained in Australia. You financially support your family. You are not legally separated from your spouse. You are residing in Australia according to ordinary concepts and you are choosing to work outside Australia rather than within Australia. You are a resident under this test. | Detailed Reasoning - The domicile test: If a person has 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. | Detailed Reasoning - Domicile: There are essentially 3 types of domicile that an individual can have: · the domicile of origin; · the domicile of choice; and · The domicile of dependency. Basically, the domicile of origin of an individual is where the individual was born. 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. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. In your case, you were born in Australia and are a citizen of Australia; therefore, your domicile of origin is Australia. Although you intend to remain overseas indefinitely, you do not have permanent residency or citizenship of any other country. Therefore, you have not proven an intention to make another country your home indefinitely and your domicile remains Australia. As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | Detailed Reasoning - Permanent place of abode: 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. In your case: · You left Australia to work overseas · You rent an apartment in country X · You stay in employer provided accommodation in country Y · Your family remain in Australia · You financially support your family The Commissioner is not satisfied that you have established a permanent place of abode outside Australia. You rent an apartment in country X which is on a 12 month lease, you work in country Y in employer provided accommodation, your family did not accompany you overseas and you financially support your family. Your personal ties are closer to Australia than country X or country Y Therefore you are a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes. You are required to declare your income both in and out of Australia in your Australian tax return.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.