Private ruling: Residency
Date of advice: 16 September 2015
Published: September 2015
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | Yes.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y to live and work. You are currently employed in Country Y. You have a non-immigrant visa to enter Country Y. The visa is for X years and can be extended. The visa allows you to stay in Country Y on the condition you are employed in Country Y. You will be leaving Australia permanently. You intend on retiring in Country Y. You have not taken any steps to take up permanent residency in Country Y as your work visa guarantees your ability to be in Country Y. You may apply for a retirement visa once you have retired. You do not intend on taking up citizenship in any other country as your Australian passport offers you significantly greater freedom than any Asian passport. You and your spouse are currently going through divorce proceedings. You have children. You have shared custody of your children. You will return to Australia for approximately XXX days each year to care for your children. During the period you are caring for your children you will take them overseas for holidays which will amount to approximately XX days each year. You will not exceed 183 days in any financial year in Australia. You will work while you are in Australia caring for your children. You will undertake business development with current and prospective clients as opposed to operational matters. You and your spouse are financially independent. You will stay in fully furnished apartments when you are in Australia caring for your children. These apartments are leased by your employer and are for all employees, you will not have any personal affects with you in Australia other than a suit case with your clothes etc. You will have sole use of the apartment when you are in Australia and your children will stay with you at the apartment for the period you are in Australia. The apartments are available to the employees in Australia and the employees outside Australia for work purposes. You and your spouse jointly own a number of rental properties in Australia. You have closed all your Australian bank accounts. You have sold your car in Australia. You rent an apartment in Country Y. You have taken all your personal belongings to Country Y. Your personal belongings comprise the following in Country Y: Full wardrobe of clothes including suites and casual clothes Shoes Pictures and wall hangings Bed linen and blankets Alcohol for bar Scuba diving equipment Family Photo albums Watch collection Camera and camera equipment Electric kitchen appliances, kitchen utensils, pots, pans, plates and cutlery Books Wifi router TV and DVD player You will ship the following remaining items from Australia to Country Y: Ski equipment Books Personal and financial records Personal computers Wii video game Camping Equipment Children's clothing and shoes Exercise equipment Children's bikes Travel Luggage Toys Chinese painting wall hangings You will establish social connections in Country Y. You intend on cancelling your Australian health insurance. Neither you nor your spouse is eligible to contribute to the relevant commonwealth 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 went to Country Y to live and work. You have left Australia permanently. You do not intend on applying for permanent residency in Country Y. You may apply for a retirement visa in Country Y at the end of your working life. You do not intend on taking up citizenship of any other country. You have a rented apartment in Country Y and you have moved all your personal belongings into this apartment. You will return to Australia for approximately XXX days year to care for your children as you have joint custody of the children. You will stay in employer provided accommodation in Australia. This accommodation is for your sole use while you are in Australia. You will spend approximately XX days outside Australia on holiday with your children each year. Based on the facts above you will maintain a strong association with Australia. You will be in Australia caring for your children for approximately XXX days; you will carry out your employment duties from Australia while you are caring for your children. You do not intend on taking up permanent residency in Country Y while you are working in Country Y and you do not intend on becoming a citizen of any other country. Your ties with Australia are strong and you are still residing in Australia according to ordinary concepts as you have not demonstrated that your connections to Australia have been broken. | Detailed Reasoning - The domicile test: If a person's domicile is in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. 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. Your domicile of origin is Australia. You do not intend on taking up permanent residency of Country Y until after you cease your employment at which point you may apply for a retirement visa. You do not intend on taking up citizenship of any other country as you believe your Australian passport offers you significantly greater freedom than any Asian passport. The Commissioner is not satisfied that you have a permanent place of abode outside Australia for the following reasons: • You spend approximately XXX days in Australia caring for your children and working each year • You have an employer provided apartment in Australia • You spend approximately 6 months in Country Y living and working each year You are 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 funds. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes.