Private ruling: Residency
Published: May 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 18 May 2013

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


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

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 regards 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. These tests are: 1. The 'resides' test; 2. The 'domicile' and 'permanent place of abode' test; 3. The '183 day' test; and 4. The 'superannuation' test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. The 'resides' test is the primary test for determining the residency status of an individual. If residency is established under the 'resides' test, the remaining three tests do not need to be considered. If residency is not established under the 'resides' test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The 'resides' test: The 'resides' tests considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. The ordinary meaning of the word 'resides', according to The Macquarie Dictionary [Multimedia - online], is to 'dwell permanently or for a considerable time; have one's abode for a time'. Taxation Ruling IT 2650 Income Tax: Residency - Permanent Place of Abode Outside Australia specifies that a person's place of abode is where they live. You have stated that you will be staying in a rental property in Country A with your spouse for the duration of your spouse's employment. Therefore, you are a not a resident of Australia under this test as you will not be residing in Australia according to the ordinary meaning of the word 'reside'. | Detailed Reasoning - Domicile: Under this test, a person whose 'domicile' is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner of Taxation is satisfied the person's permanent place of abode is outside Australia. A person's 'domicile' is generally their country of birth. This is known as a person's 'domicile' of origin'. A person's 'domicile of origin' will not usually change but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a 'domicile' by choice outside their 'domicile of origin', a person must have an intention to make their home indefinitely in a country outside their 'domicile of origin'. Sufficient proof of such an intention is considered to exist in cases where a person becomes a citizen of a country outside their 'domicile of origin'. Taxation Ruling IT 2650 specifies, at paragraph [10], that a person with an Australian 'domicile' who is living outside Australia will retain their Australian 'domicile' if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency' - at the end of a specific period of time for example. Paragraph [11] of Taxation Ruling IT 2650 provides that if it is established that a person has his or her 'domicile' in Australia, 'subparagraph (a)(i) of the definition of "resident" requires the Commissioner to be satisfied that the person's 'permanent place of abode' is not outside Australia'. Your 'domicile of origin' is Country A. You have acquired a new 'domicile of choice' in Australia when you elected to become an Australian citizen. | Detailed Reasoning - Permanent Place of Abode: Taxation Ruling IT 2650 outlines the Commissioner of Taxation's view on the application of the term 'permanent place of abode'. This view is considered through discussions on the decisions in FC of T v Applegate 79 ATC 4307; (1979) 9 ATR 899 and FC of T v Jenkins 82 ATC 4098; (1982) 12 ATR 745. This Ruling concludes 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 Ruling also examines the factors to be taken into account in order to determine an individual's residency status upon leaving Australia: · The intended and actual length of stay in the overseas country; · Any intention either to return to Australia at some definite point in time or to travel to another country; · The establishment of a home outside Australia; · The abandonment of any residence or place of abode the individual may have had in Australia; · The duration and continuity of the individual's presence in the overseas country; and · The durability of association that the individual has with a particular place in Australia. In your case: · You are travelling to Country A as your spouse wants to maintain their professional registration. Your spouse will be employed for 6 months to complete this registration. Once this is complete, you have an intention of returning to Australia in mid-2014 after travelling around Country A and surrounding areas on holiday with your spouse. · You have arranged a 6-month lease in Country A, although this is expressly related to your spouse's employment. · Your main residence and the majority of your assets are in Australia. · You have strong social and familial connections in Australia. Based on the reasons discussed above, the Commissioner is not satisfied that you will have a permanent place of abode while in Country A. Therefore, you will remain a resident of Australia under this test for the period you are in Country A. As you are a resident under this test, it is not necessary to consider the remaining tests of residency. | Detailed Reasoning - Your residency status: You will be a resident of Australia for taxation purposes for the period you are overseas.

Relevant facts: You are a citizen of Australia, Country A, and Country B. Your Australian citizenship is the citizenship achieved most recently. | You are planning to travel around Country A and surrounding areas from mid-2013 to mid-2014. You will be travelling on your passport from Country A. | Your spouse works in Australia. Your spouse's current work contract expires in mid-2013. | Throughout your time in Australia your spouse has maintained their professional qualifications in Country A. | Country A has now introduced a validation process for professional registration. | The validation process requires that your spouse be assessed as fit to maintain their professional qualifications by working in Country A for 6 months. Your spouse must complete this validation process by mid-2013. | You will be travelling with your spouse to Country A as they are attempting to maintain their professional registration in Country A. | You will be staying in a rental property near where your spouse will be working. | You will not be employed in Country A. | Once your spouse's validation process is complete, you will be travelling with them around Country A and surrounding areas before you returning to Australia in mid-2014. You may return to Australia earlier if your spouse obtains further short-term employment in Australia. | You main residence is in Australia. You are planning to lease the property out until you return. | The majority of your assets are in Australia including investment assets. You are planning to store your personal effects on your property for the majority of your trip. | Your child lives in Australia. | You have social connections.