Private ruling: Residency
Date of advice: 6 September 2017
Published: January 2018
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: No | Q2: Are you required to declare your foreign source income in your Australian tax return? | A2: No

Relevant facts and circumstances: You were born in Country Y. You are a citizen of both Country Y and Australia. You have been living and working in Country Z for a number of years. You have a 5 year employment contract in Country Z. Your contract can be extended. You rent an apartment in Country Z at your own expense. You receive a monthly rental allowance from your employer. You live with your partner in Country Z. All your personal belongings are in Country Z. You have made short trips back to Australia for recreational purposes and you stayed with your parents during this time. You have two rental properties in Australia. You have removed your name from the Australian electoral roll. You have removed your name from Medicare records. You have cancelled your Australian health insurance. You have a Country Z drivers licence. You have no intention of moving back to Australia to live. Neither you nor your spouse are 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 for the period you are working in Country Z. You are not required to declare your income derived in Country Z in your Australian tax return.