Private ruling: Residency
Published: August 2014
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 15 April 2011

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

Relevant facts and circumstances: You are a citizen of Australia. Australia is your country of origin. You have not been granted permanent residency by another country. Prior to departure you were living with your family in your house. You departed Australia. Your destination was foreign country X. You entered foreign country X on a visa, which you still have. This visa can only be held for X years. Should you choose to stay longer in foreign country X, you will need to change to another type of visa, which will be supported by your employer. You commenced employment. You were offered the possibility of ongoing employment in foreign country X six months ago. However, you have not made a definite decision yet regarding residency intentions. You also have ongoing salary support to continue your current job in foreign country X. Currently, as a family, you do not have any plans to return to Australia. You do not hold a return airline ticket. You have returned to Australia once since your departure for about one month. You are currently renting a house in foreign country X. Your employer has not provided accommodation at any stage. Your assets overseas are: • a checking account which is required for salary payments • a car • some furniture and • a computer. Prior to your departure you lived in your home which you own with your spouse. For the two weeks prior to our departure to foreign country X you stayed with some people. Your residence in Australia is currently rented out while you are residing overseas. Your assets in Australia are: • your property • a number of assets remaining in the house (refrigerator, television, microwave) • a number of household effects (paintings, musical instruments, clothes, books, etc.) • you continue to hold Australian bank accounts for transfer of rental income. Your household effects are predominantly in storage in Australia. You are receiving rental income from two properties you own. You have a share portfolio that generates income. Regarding your overseas employer: • you have salary funding • the employment can be extended indefinitely as required • you have provided a copy of your employment contract. You do not have a position is being held for you in Australia. Your family accompanied you to foreign country X: • your spouse and • children Your social and sporting connections with Australia work colleagues and friends you have kept in touch with. Your social and sporting connections with foreign country X are a number of friends through work and your daughters' school. Neither you nor your spouse has ever been a Commonwealth Government of Australia employee for superannuation purposes. You have not advised the Australian Electoral Office to have your name removed from the electoral roll. You have not advised any Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax can be deducted. You have not advised any Australian companies with whom you have investments that you are a foreign resident. You have your health insurance policy 'on hold'. This is subject to review every two years. You are required to lodge a tax return in foreign country X. You stated work as the reason for going overseas when completing the Australian Immigration Outgoing passenger card. You are over the age of 16. Assumption(s) None made

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

Reasons for decision: Summary: The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: • the 'resides' test; • the 'domicile' and 'permanent place of abode' test; • the 183 day test; and • the Commonwealth superannuation fund 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 its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. 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 considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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 with Australia compared to the foreign country concerned; and (viii) maintenance of a place of abode. The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In Shand v Federal Commissioner of Taxation 2003 ATC 2080, the Tribunal stated (at 35): Questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms. To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances. | Detailed Reasoning - (i) Physical presence in Australia: It is important to note that a person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Joachim v Federal Commissioner of Taxation 2002 ATC 2088 , the Tribunal stated (at 2090): Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home. In your case: Prior to departure you were living with your family. You departed Australia. Your destination was foreign country X. You commenced employment. You do not have a position is being held for you in Australia. You were offered the possibility of ongoing employment in foreign country X six months ago. However, you have not made a definite decision yet regarding residency intentions. You also have ongoing salary support to continue your current job in foreign country X. Currently you do not have any plans to return to Australia. You do not hold a return airline ticket. You have returned to Australia once since your departure for about one month. You are currently renting a house in foreign country X. Prior to your departure you lived in your dwelling which you own with your spouse. Your dwelling is currently rented out while you are living overseas. Your household effects are predominantly in storage in Australia. Your family accompanied you to foreign country X: • your spouse and • children | Detailed Reasoning - (ii) Nationality: You were born in Australia and you are a citizen of Australia. | Detailed Reasoning - (iii) History of residence and movements: You departed Australia. You have returned to Australia once since your departure for about one month. | Detailed Reasoning - (iv) Habits and 'mode of life': You live and worked outside Australia. You commenced employment in foreign country X. You were offered the possibility of ongoing employment in foreign country X six months ago. However, you have not made a definite decision yet regarding residency intentions. You also have ongoing salary support to continue your current job in foreign country X. Currently you do not have any plans to return to Australia. You have returned to Australia only once since your departure for a period of about one month. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: You have returned to Australia once since your departure for about one month to do several things: | Detailed Reasoning - (vi) Purpose of visits to and absence from Australia: You left Australia to live and work in foreign country X. You have returned to Australia once since your departure for about one month to do several things. | Detailed Reasoning - Family: Your family accompanied you to foreign country X: • your spouse and • children | Detailed Reasoning - Business or economic: You are working outside Australia. You have a rental property in Australia from which you derive income. | Detailed Reasoning - Assets: In Australia: • a bank account • a rental property and • furniture and household effects in storage Overseas: • a checking account • a car • some furniture and • a computer. | Detailed Reasoning - (viii) Maintenance of a place of abode in Australia: You own a dwelling in Australia which retains some of your furnishings. | Detailed Reasoning - Summary of the resides test: As mentioned above, the weight given to each factor varies with individual circumstances, no single factor is necessarily decisive and the term 'reside' should be given a wide meaning. Based on the above, you have not retained a continuity of association with Australia while you have been living and working overseas and you are not residing in Australia according to the ordinary meaning of the word. Therefore, you are not a resident of Australia under the 'resides' test of residency. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident 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. | Detailed Reasoning - Your domicile of origin is Australia.: A domicile of choice is adopted when you become a citizen of a new country or apply for permanent residency in a new country. Your domicile of choice is Australia as you are a citizen of Australia and have been living here prior to going to overseas to work. In order to show that a new domicile of choice in a country outside Australia 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. You have not formed an intention to make your home indefinitely outside Australia. However, currently you do not have any plans to return to Australia. The Commissioner is satisfied that you have a permanent place of abode outside Australia as you have formed the intention to make your home indefinitely and currently we do not have any plans to return to Australia. You are not a resident under this test. | Detailed Reasoning - The 183-day test: When a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You have returned to Australia only once since your departure for foreign country X for a period of about one month. You are not a resident under this test as you have not been in Australia for 183 days or more in any income year. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Only Commonwealth Government employees are eligible to contribute to the CSS and PSS. Neither you nor your spouse is eligible to contribute to a Commonwealth Super fund. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for tax purposes for the relevant periods.