Private ruling: Residency
Date of advice: 17 January 2017
Published: June 2017
Ruling period: Year ended 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: DD MM YY

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You and your family have been living outside Australia for a number of years in the Country Y. You took all your belongings with you to Country Y and you set up a permanent place of abode in Country Y. Prior to leaving for Country Y you worked for Australian branch of an international company. You moved to country Y to take up a position with the Country Y branch of the international company. Your former residence in Australia was sold in 201X. You relocated to Country Z in the 201X income year working for the same company's branch in Country Z. Your contract is for 2 years with the option to extend it for a further 2 years. You are living in accommodation provided by your employer. You have a bank account in Country Z and you have purchased a motor vehicle. You have an employment pass for country Z for 2 years. You are a resident of country Z for taxation purposes. Your spouse and children have returned to Australia while your child finishes their schooling. Your spouse intends to join you wherever you are living once your child is able to take care of them self. You will visit your family each month for a weekend. Your visits to Australia will not exceed 60 days in any financial year. You went from country Y to Country Z and you did not return to Australia prior to relocating to country Z. You have income from a rental property in Australia along with dividend income. You and your spouse are not 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. 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 been living and working outside Australia for a number of years. You worked for the Country Y branch of an international company. You relocated to Country Z in the 201X income year working for the Country Z branch of the international company. Your employment is for 2 years in country Z with the option of renewing the contract. You live in rented employer provided accommodation in Country Z. Your family have returned to Australia so your child can finish their schooling. Based on the facts above you are not maintaining an association with Australia and you will not be 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 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 set up a permanent place of abode outside Australia for the following reasons: ● You have been living and working outside Australia in Country Y for a number of years ● You have relocated to Country Z working for the Country Z branch international company ● Your contract in country Z is for 2 years and can be extended ● You live in rented employer provided accommodation in Country Z 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 exceed 60 days in Australia for the period you are living and working in Country Z. 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. You are not a resident under this test. | Detailed Reasoning - Your residency status: You will not be a resident of Australia for taxation purposes for the period you are living and working in country Z.