Private ruling: Residency
Published: May 2015
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 20XX

Ruling: Question and answer | Are you an Australian resident for tax purposes? | No.

Relevant facts and circumstances: You are an Australian and Country A citizen, born in Australia. You departed Australia in 20XX for Country B. You arrived in Country A in 20XX. You moved to Country A to further your development. When you arrived in Country A you travelled around and stayed with friends. You obtained employment with the same employer for 2 years from 20XX to 20XX. You lived at the same address for 2 years from 20XX to 20XX. You returned to Australia in 20XX for around 2 months. You returned to Australia in 20XX for around 2 months. From 20XX you have travelled throughout the Country A and Country C, and travelled to Country B and Australia in 20XX for around 4 months. You were in Australia for approximately 2 months. The purpose of your visits to Australia was to visit family and friends, attend special family occasions, and do some touring. You have not decided if you will return to Australia permanently. You own a vehicle and have a bank account in Country A. You have savings with a bank in Australia, and superannuation. The only income you receive from Australian sources is interest from your bank. You do not have any children or a spouse in Australia, but do have some family. You also have friends and connections in Australia. In Country A you have friends and connections. You gave away your household effects when you left Australia. You have not notified your bank, Medicare or your health insurance provider that you are a non-resident. You have not been removed from the Australian electoral roll. You think you stated your reason for going overseas on the Australian Immigration Outgoing passenger card as 'holiday'.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6(1) | Income Tax Assessment Act 1936 Subsection 6-5(3) | Income Tax Assessment Act 1936 Subsection 6-5(3)(b) | Income Tax Assessment Act 1997 Section 995-1(1)

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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 (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 test: The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Based on the facts of your case, the Commissioner accepts that you were not residing in Australia according to the ordinary meaning of the word from when you arrived in Country A in 20XX. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner 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 new domicile by choice, 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 is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. In your case, you are a citizen of Country A and Australia, and therefore can choose to reside in either country indefinitely. You moved to Country A in 20XX to further your development, you obtained employment in the Country A for two years, and maintained a fixed address for two years. We consider that you formed an intention to make Country A your permanent place of abode when you arrived there in 20XX. While you have returned to Australia three times since then, these visits have only been for short periods and for reasons consistent with that of a holiday. You are still residing in Country A with no established intention to return to Australia, and do not have a spouse or children in Australia. Therefore, we do not consider you an Australian resident for taxation purposes under the domicile test from the time you arrived in Country A in 20XX. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You were in Australia for more than 183 days in the 20XX financial year. However, Australia is not considered your permanent place of abode from the date you arrived in Country A. You have not satisfied the 183 day test for the 20XX, 20XX, 20XX and 20XX financial years. | Detailed Reasoning - Superannuation test: Based on the facts you have provided this test is not relevant in your situation as it only applies to persons eligible to contribute to the superannuation funds for Australian government officers, their spouses, or their children under the age of 16 years. | Detailed Reasoning - Conclusion: Based on the facts you have provided, you did not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 from the date you arrived in Country A in 20XX. Therefore, you are considered a non-resident for Australian tax purposes from this date.