Private ruling: Residency
Date of advice: 7 February 2018
Published: June 2018
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 7 July 2016

Ruling: Q1: Are you are resident of Australia for income tax purposes? | A1: No

Relevant facts and circumstances: You were born in Country Y. You are a citizen of Australia. You and your family left Australia in the 2016 income year with the intention on not returning to Australia on a permanent basis. You and your family initially went on a holiday and then went to Country Z to live and work. You arrived in Country Z in the 2017 income year. Your spouse finalised their employment contract with their employer in Country Z in the 2017 income year. Your spouse commenced their employment in Country Z a few weeks later. Your spouse’s initial contract was for six months while the company was being established and their second contract was for 12 months which is renewed annually and they intend on renewing the contract each year. You initially entered country Z on a tourist visa. You will apply for a work visa once you have obtained all relevant documentation. You and your family rent accommodation in Country Z. You intend on purchasing a property once you are legally able to do so in Country Z. You took small electrical and personal items with you to Country Z. Your children are enrolled in school in Country Z. You have taken out health insurance in Country Z. You have purchased a car in country Z and have insurance on the car. You have rented out your family home in Australia. You have rental properties and bank accounts in Australia. You and your family have not returned to Australia since leaving and have no intention to return in the near future. You teach a sport and do charity work in country Z. Neither you nor your spouse is eligible to contribute to the PSS or the CSS Commonwealth superannuation funds.

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

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. 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 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. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

ATO view documents: Taxation Ruling TR 98/17 – Income tax: residency status of individuals entering Australia | Taxation Ruling IT 2650 – Income tax: residency – permanent place of abode outside Australia | Taxation Ruling IT 2650A (Addendum) – Income tax: residency – permanent place of abode outside Australia | Other references (Non ATO view – example court cases, etc): Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 | Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) | Federal Commissioner of Taxation v Miller [1946] HCA 23; (1946) 73 CLR 93. | Levene v Inland Revenue Commissioners [1928] UKHL 1; [1928] AC 217. | Applegate v Federal Commissioner of Taxation [1978] 1 NSWLR 126