Private ruling: residency - leaving Australia
Date of advice: 8 September 2016
Published: November 2016
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2016

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes? | No. | 2. Is the source of your income Country Z? | Yes.

Relevant facts and circumstances: You were born in Country Y. You are a citizen of Australia. Your spouse has gone to Country Z for work purposes. You and your child have accompanied your spouse to Country Z. Your spouse's work contract is for 3 years and this can be extended. Your child has been enrolled in school in Country Z. Your spouse's employer is providing your accommodation in Country Z. You will rent out your family home in Australia. You freighted your belongings from Australia to Country Z. You are employed by an Australian company. You will carry out your work duties for the company from your home in Country Z. You will return to Australia to attend to work commitments. You will not return to Australia for any other purpose. You will not be in Australia for more than 183 days in any financial year. You will be in Country Z on a spousal visa. You have notified your bank, Medicare, superannuation fund, private health insurance and the Australian electoral commission that you are a non-resident. You intend on leaving Australia permanently and most likely will not return to Australia after your spouse completes their work contract in Country Z. Neither you nor your spouse is eligible to contribute to the PSS or the CSS super 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. 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • resides test • domicile and permanent place of abode test • 183 day test and • Commonwealth superannuation fund 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 have accompanied your spouse to Country Z. You will work for an Australian company while you are in Country Z. You will carry out this work from your home in Country Z. You will return to Australia for work commitments. You will not return to Australia for any other purpose. You intend on leaving Australia permanently. Based on the facts above you will not maintain a connection with Australia for the period you are in Country Z. You are not a resident under this test. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be an Australian resident 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. Your domicile of origin is Country Y. Your domicile of choice is Australia. 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 set up a permanent place of abode outside Australia for the following reasons: • You have left Australia permanently • You have accompanied your spouse to Country Z for work purposes • Your home in Australia is being rented out You are not a 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 in any financial year. You are not a 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 fund. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes. You will carry out work for the Australian company from your home in Country Z. The source of a taxpayer's income is the place where the services are performed: French v. FC of T (1957) 98 CLR 398. The source of your income will be Country Z as you will perform the work duties from your home in Country Z.