Private ruling: Residency
Date of advice: 18 January 2017
Published: June 2017
Ruling period: Year ended 30 June 20BB | Year ending 30 June 20CC | Year ending 30 June 20DD | Year ending 30 June 20EE
Date scheme commenced: 1 July 20AA.

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: Yes

Relevant facts and circumstances: You were born in Country B. You relocated to Australia many years ago. You have no intention of relocating to another country. You have lodged Australian income tax returns for the entire time that you have been considered a resident. You have a child who lives in Australia. You own real estate in Country B which was acquired prior to you relocating to Australia. You commenced business in 20xx. You have registered for and obtained an Australian Business Number. Your work caters to clients in both Australia and overseas. You undertake half of your business engagements in Australia. You spend a considerable amount of time in Country B and Country C due to your client's requirements. You own a property in Australia that you consider to be your family home and principle place of residence. Your personal possessions are kept at this address. You return to Australia when work permits and reside in your Australian residence which is available to you all year round. You have no immediate intention of disposing of your Australian residence. You hold an Australian bank account which is the primary source of funding your lifestyle and attending to the maintenance of your Australian property. You have not advised your financial institution that you are relocating from Australia therefore have not been subject to non-resident withholding tax on any interest derived. You intend to lodge your income tax returns in Australia on the basis that you are an Australian resident for taxation purposes. You are deemed to be a tax resident of Country B due to recent tax law amendments. You have lodged income tax returns in Country B for the 20xx and 20xx income years on the basis that you are a treaty resident in Australia. You were required to vote in the state and federal elections despite being out of the country. You were not a member or eligible employee of a Commonwealth Superannuation Fund.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) and | 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. | Detailed Reasoning - The resides test: 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, there are various factors that indicate that you reside in Australia. These factors include the following: ● You own a property in Australia that you consider to be your primary place of residence and return when you are not required in Country B; ● Your child lives in Australia; ● You continue to hold an Australian bank account in order to maintain your primary residence and to fund your lifestyle; and ● Your business requires you to provide services in Australia, Country B and Country C for an equal amount of time. Based on the facts of your case, the Commissioner accepts that you reside in Australia according to ordinary concepts; therefore, you are a resident of Australia for taxation purposes. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Generally speaking, persons leaving Australia would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile by choice or by operation of law. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that “a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression.” In your case you intended return to Australia and you return on the conclusion of each of your employment obligations; ● You have a home in Australia that you return to and that residence is available to you all year round; ● Your personal assets are maintained in Australia; ● You undertake half of your business arrangements in Australia; and ● You live in Country B as this suits the needs of your clients and return to Australia once your employment obligations have been completed. Based on these facts, it is therefore considered that you have established a permanent place of abode in Australia. | Detailed Reasoning - The 183-day test: Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that your usual place of abode is outside Australia and you have no intention to take up residence here. In your case you advise that you intend to return to Australia however you spend a considerable amount of time in Country B and Country C. As a result, you have not satisfied this test | Detailed Reasoning - The superannuation test: You will be a resident if you are eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or you are the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. You have advised that you are not a contributing member of a Commonwealth Superannuation fund. Therefore, this test does not apply to you | Detailed Reasoning - Your residency status: Based on the facts you have provided, we can conclude that you will satisfy both resides and the domicile tests of residency. Accordingly you are 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.