Private ruling: residency
Date of advice: 30 November 2018
Published: March 2019
Ruling period: Income year ended 30 June 2018 | Income year ending 30 June 2019 | Income year ending 30 June 2020
Date scheme commenced: 1 July 2017

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | No.

Relevant facts and circumstances: You are a citizen of a foreign country. Your spouse is also a citizen of a foreign country. You and your spouse were granted visa to enter Australia which does not allow you to stay permanently. You and your spouse are approaching retirement age. You currently work for a company in the foreign country. You have been employed by them for many years. You and your spouse own a property in the foreign country which has been your main residence. You continue to use this property as your main residence. Your spouse resides in Australia with your children. You currently travel extensively for your work and, as is common in the foreign country culture, your close and extended family reside with you and look after the property during your extended absences. Several years ago you lodged an application for a visa with the Australian Immigration. At the time of making the application, you knew that it would take a number of years for the application to be approved and thought that by the time it was approved you would be over retirement age and have retired from your position with the company. You personally had a goal of retiring with the company at retirement age. You will also receive a much higher payout figure on final retirement by reaching this age. You received a reply from immigration that there many applicants in front of you and that the Department was only approving more than 1,000 applicants per year. At the time there would have been over 20,000 applicants before your application. You waited a year to see if the situation would improve and new slots might be allocated and continued with the application. At the time of the application 90% of the applications were being processed in 34 months. This coincided with the timeline for your retirement age. You cancelled the application for the old visa. Subsequently, a visa was granted. You were not aware that the waiting period from the original visa would be included in the new application and was surprised when they were granted the visa after only several months. Your spouse decided to move to Australia and live here permanently with your children while you continued to live and work in a foreign country. Your intention is to change your domicile from a foreign country to Australia when you retire from the company.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: 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 for the period of the ruling. 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.