Private ruling: residency and leaving Australia
Published: October 2014

Ruling: You are a citizen of Australia. | Your country of origin is Australia. | You left Australia to commence work in Country A. | Your purpose for moving to country A is to work and build a life there. | You have no plans to return to Australia beyond brief visits to see your family. | You do not hold a return airline ticket. | You have returned to Australia on three occasions. | You live in rented accommodation in country A. | You have bank accounts well as a credit card in country A | You are employed as locally engaged staff in country A.. | Your employment contract can be extended in 2 year increments, with no limit on the number of extensions. | You do not have any property in Australia. | You are not nor were you a Commonwealth Government employee.


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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 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 test • the 183 day test • the superannuation test. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word 'resides'. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax 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'. 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 courts have stated that the word ' reside' should be given the widest meaning. 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 to different countries (viii) Maintenance of Place of abode. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - (i) Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249): 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 . You are living in country A. You do not intend to return to Australia. | Detailed Reasoning - (ii) Nationality: You are an Australian citizen. You have not been granted permanent residency in any other country. You have a visa that allows you to remain in the country A for 5 years. | Detailed Reasoning - (iii) History of residence and movements: You have lived in Australia and have Australian Citizenship. You have employment in country A. You have returned to Australia to visit family and to arrange a visa for country A. | Detailed Reasoning - (iv) Habits and "mode of life": You have commenced working in country A. You are living in rented accommodation and are in a relationship. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country. You have returned to Australia to visit family members on occasion and once to apply for and receive a visa for country A. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: The purpose of your absence from Australia is to work in country A on an indefinite basis. You do not intend to return to Australia. You have returned to Australia to visit family members and to arrange a Visa for country A. | Detailed Reasoning - Family: You are living on your own in country A. You are in a relationship in country A. | Detailed Reasoning - Business or economic ties: You do not have any business ties in Australia. You do not intend to return to Australia. | Detailed Reasoning - Assets: You have a bank account in Australia. This is purely for emergency purposes. You have bank accounts and a credit card in country A. | Detailed Reasoning - Maintenance of Place of abode in Australia: You do not own a property in Australia. You do not maintain a place of abode in Australia. | Summary: As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning. There are various factors outlined above which indicate that you will cease to be a resident of Australia. Specifically; • You will work in country A indefinitely. • You will be marrying a citizen of country A. • You do not intend to return to Australia. Based on a consideration of all of the factors outlined above, you will not maintain a continuity of association with Australia while you are overseas. You do not intend to return to Australia. Therefore, you will be not be residing in Australia in accordance with the ordinary meaning of the word. You will not be a resident under the resides test of residency for the relevant income tax years. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days 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 do not satisfy this test as you will be here for less than 183 days and do not intend to return at all. | 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. Generally this would include a permanent or temporary employee of the Australian Public Service (APS). As you are not nor have been a Commonwealth Government employee, you are not considered to be a resident of Australia under the superannuation test. | Detailed Reasoning - Conclusion.: As you have left Australia to work and live in country A indefinitely with no intention to return to Australia, and you have no assets including real property in Australia you are not a resident of Australia for tax purposes.