Private ruling: Residency
Date of advice: 9 November 2015
Published: November 2015
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Will you be a resident of Australia for tax purposes from the time you relocate to country X? | No.

Relevant facts and circumstances: You were born in Australia and you are a citizen of Australia. You and your partner are leaving Australia to live and work in country X for an indefinite period of time. You have signed an employment contract with an employer in country X for an open ended period of time. You will obtain a residency visa for country X which will be valid for as long as you are employed. You do not have an expected return date to Australia and do not see yourself returning for at least five years. You will rent an apartment with your partner in country X and the apartment will not be provided by your employer. You have a house and mortgage in Australia and the house will be rented out to tenants through a lease while you are overseas. You will dispose of some of your household items and place others in storage while you are overseas. You will dispose of your motor vehicle(s). You will retain an Australian bank account and credit card while you are overseas. While you are based in country X, you intend to return to Australia once or twice a year to visit family and friends and you expect each visit will be between four days and two weeks. Neither you nor your partner is a member of an Australian Commonwealth government superannuation fund. You intend to advise Medicare, the Australian Electoral Commission and the financial institutions you deal with that you are leaving Australia.

Relevant legislative provisions: 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 test, • the 183 day test, and • 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 considered to 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 ordinary meaning of the word 'reside', according to the Macquarie Dictionary , [Multimedia], version 5.0.0 (2001), 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 your case, you are relocating with your partner to a foreign country to live and work for an unspecified period of time. Your will establish your own accommodation in the foreign country and rent out your Australian residence. Based on the information supplied, you will no longer be residing in Australia from the date you relocate to the foreign country and will not be a resident under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Domicile A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, your domicile of origin is Australia and there is no evidence to suggest that you will acquire a domicile of choice in the foreign country. Therefore, your domicile will still be Australia. Permanent place of abode It is clear from the case law 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 courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, it was stated that 'a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression.' As previously mentioned, you are relocating with your partner to a foreign country to live and work for an unspecified period of time. You will establish your own accommodation in the foreign country and rent out your Australian residence. Based on the information supplied, you will have a permanent place of abode outside Australia from the date you relocate to the foreign country and will not be a resident under this test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. As you will not be physically present in Australia for more than 183 days in an income year while you are based overseas, you will not be a resident of Australia under this test. | Detailed Reasoning - The superannuation test: A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees. You will not be a resident under this test as neither you nor your partner is eligible to contribute to the applicable funds. | Summary: As you do not meet any of the above tests, you will not be a resident of Australia for tax purposes from the date you leave Australia to work overseas.