Private ruling: Residency
Published: July 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You were born in Australia and are a citizen of Australia. You have two dependent children. You and your children moved to an overseas country for employment purposes. Your former spouse has also moved to the overseas country to be closer to the children. You entered the overseas country on a three year temporary work visa. You were living in a rental accommodation in Australia before leaving. Having terminated that lease you now have no home to return to in Australia. You were offered a position with an employer in the overseas country in an ongoing role. This was a transfer from your position with their Australian division that closed down. Your employer will assist you to get residency status once you have served a waiting period in the overseas country. You have no assets in Australia except for a superannuation fund. You have never worked in the public sector and are not a member of the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme. You sold your car and had all of your other belongings shipped to the overseas country. You have signed a two year residential lease and hope to purchase a property in the overseas country upon the expiration of that lease. Your intention is to remain in the overseas country indefinitely. You will advise the Australian Electoral Commission of your move. You have advised your private health insurer that you have moved overseas indefinitely and ceased that cover.

Relevant legislative provisions: Section 995-1(1) of the Income Tax Assessment Act 1997 | Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) 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, which provides four tests to ascertain whether a taxpayer is an Australian resident for income tax purposes. These tests are: 1. The resides test; 2. The domicile test; 3. The 183 day test; and 4. The superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia . 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 resides. 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 resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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 are living in rental accommodation in an overseas country where you have signed a two year lease. You have no plans to return to Australia. Therefore, you are not a resident of Australia under this test as you were not residing in Australia according to the ordinary meaning of 'reside'. | Detailed Reasoning - The domicile test: Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Domicile 'Domicile' is a legal concept to be determined according to the Domicile Act 1982 and common law rules. The courts have defined it as the legal relationship between a person and a territory subject to a distinctive legal system that invokes that system as the individual's personal law ( Henderson v Henderson [1965] 1 All ER 179 at 180-181). A person's domicile is in their country of origin unless they acquire a different domicile by choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice. Your domicile of origin is Australia. You did not acquire a new domicile of choice by moving to an overseas country for an employment contract. Permanent place of abode The leading authority on the meaning of 'permanent place of abode' is Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1; 9 ATR 899 ( Applegate ), which says that a person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. In Applegate , the court found that 'permanent' does not mean everlasting or forever but it is to be contrasted with temporary or transitory. The courts have considered 'place of abode' to refer to a person's residence, where he lives with his family and sleeps at night. In your case you: • travelled to an overseas country to take up an employment contract • intend to make your home indefinitely in the overseas country. To this end your former spouse has also moved to the overseas country to be closer to your children who live with you • live in rental accommodation that you have signed a two year lease on • sold your car in Australia and had all of your other possessions shipped to the overseas country • have no assets in Australia • will remove yourself from the Australian Electoral Roll • cancelled your private health insurance in Australia Based on the reasons discussed above, the Commissioner is satisfied that you have a permanent place of abode in the overseas country. Therefore, you are not a resident of Australia under this test from the time you left Australia. | Detailed Reasoning - The 183 day test: When a person is present in Australia for 183 days or more 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. In the year ended 30 June 2014 you spent more than 183 days in Australia. In this time, the Commissioner is satisfied that your usual place of abode was outside Australia from the time you departed. Therefore you are not a resident of Australia under this test from that date. | Detailed Reasoning - The Superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a contributing member of the PSS or CSS. Further, you are over 16 years of age. Therefore, you are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia under any of the above tests from the time you departed Australia.