Private ruling: Residency for taxation purposes
Date of advice: 23 March 2018
Published: June 2018
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
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 You are a citizen of Australia. You left Australia to live and work overseas in 19XX. You became a permanent Country A resident in 19XX. You moved to the Country B in 20XX and were granted citizenship in 20XX. You and your family continued to live overseas until your family moved to Australia in 20XX. You are still living overseas and did not move to Australia to live with your family. You purchased a house in Australia during 20XX for your spouse and children to live in.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | 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 taxation 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 (and permanent place of abode) 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. The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, 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 (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 Taxation Ruling IT 2650 Income tax: residency – permanent place of abode outside Australia 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. When you became a non-resident of Australia you broke your association or connection with Australia. Although your family have relocated to Australia and established their association and resident status within Australia, you have remained overseas due to your employment commitments. In this situation, the residency status of you and your family are looked at independently from each other. As such, under the resides test, you are considered to be residing overseas unless you return to Australia on a permanent basis. Based on the information provided, you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile (and permanent place of abode) test: Under this test, a person whose domicile is Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to 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. The Commissioner is satisfied that you have a permanent place of abode outside Australia and therefore you are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - The superannuation test: The superannuation test is the third statutory test. This test covers current Australian government employees and states you are a resident if you are a member of the superannuation scheme established under the Superannuation Act 1990 or an ‘eligible employee’ for the purposes of the Superannuation Act 1976 . As you are not an eligible employee you are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - The 183 day test: As you have not been in Australia for 183 days or more within a year since your departure in 19XX you are not a resident of Australia for taxation purposes under this test | Detailed Reasoning - Conclusion – your residency status: Based on the facts you have provided, you do not satisfy any of the tests of residency as outlined in subsection 6(1) of the ITAA 1936. Therefore, you are not a resident of Australia for taxation purposes.