Private ruling: International Residency
Date of advice: 7 June 2016
Published: July 2016
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for income tax purposes from July 20XX when your family will return to Australia to live? | A1: Yes

Relevant facts and circumstances: You are an Australian citizen who works in Country X. You moved to there in 200X. You are married. You, your spouse and children are all Australian citizens. You purchased a home in Country X over 5 years ago. Your children have been schooled locally since they attained school age. Your spouse intends to move permanently back to Australia shortly. They will buy a home in Australia and your children will attend school in Australia. Your spouse will seek work in Australia. Once your spouse moves you will spend your leave in Australia where you will visit your spouse and children. You estimate that you will spend between X to Y days per month in Australia and this may total up to 100 days per year where you are resident in Australia. In school holidays your children will fly to Country X to live with you. You will continue to live and work in Country X where you will pay normal taxes on your income. You will pay all family medical bills through your local medical insurance.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | 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) while Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia (TR 98/17) outlines the guidelines used to determine whether the individual is a resident. The definition provides four tests to ascertain if an individual is a resident of Australia for income tax purposes. These tests are: 1. The resides test (residence according to ordinary concepts) 2. The domicile test 3. The 183 day test 4. 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 the individual does not reside in Australia according to ordinary concepts, they may still be considered to be a resident of Australia for income tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - 1. The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001 , rev. 3rd 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'. TR 98/17 discusses the factors that are taken into account in assessing whether an individual's behaviour is consistent with residing in Australia. Various court and Tribunal decisions have also considered the ordinary meaning of the word 'reside' with the recent being Pillay v. Commissioner of Taxation [2013] AATA 447; Sneddon v . Commissioner of Taxation [2012] ATC 10-264; [2012] AATA 516 ( Sneddon), Iyengar v. Commissioner of Taxation [2011] ATC 10-222;[2011] AATA 856 (Iyengar). The Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year: Physical presence in Australia; Nationality; History of residence and movements; Habits and 'mode of life' Frequency, regularity and duration of visits to Australia; Purpose of visits to or absences from Australia; Family and business ties with Australia compare to the foreign country concerned; and Maintenance of a place of abode. The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive. In Joachim v. Federal Commissioner of Taxation 2002 ATC 2088; AATA 610, 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 involuntarily, a person does not necessarily cease to be a 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. Physical presence in Australia TR 98/17 considers physical presence or length of time by itself is not determinative of residency. An individual's behaviour as reflected by a degree of continuity, routine or habit that is consistent with residing here is relevant. Nationality You are a citizen of Australia but also have the right to work and live in Country X where you have established a home. Frequency, regularity and duration of visits to Australia You intend to spend approximately 100 days visiting Australia once your spouse returned to live in Australia. Therefore you will establish a regular pattern of visiting Australia with up to X days per month spent in Australia. Family and business ties with Australia Your spouse will buy a home in Australia and you will visit them and your children in that home on a regular basis. Thus you will maintain strong family ties with Australia. Maintenance of a place of abode You will own and maintain a home in Country X and your spouse will own and maintain a home in Australia which you will visit on a regular basis. Based on all the facts, it is considered that on balance your behaviour is consistent with residing in Australia and being considered a resident for tax purposes under the resides test. | Detailed Reasoning - 2. The domicile test: Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. | Detailed Reasoning - Domicile: "Domicile" is a legal concept to be determined according to the Domicile Act 1982 and common law rules. A person's domicile is in their country of origin unless they acquire a different domicile of choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice. In your case, you are an Australian citizen. You have left Australia in 200X and have chosen to live in Country X. You have purchased a house and now live and work there. You made a permanent move from Australia to Country X in 200X. You adopted Country X as your domicile of choice and only return to Australia for brief periods. You have no intention to make Australia your domicile again. It is considered that you have abandoned your domicile in Australia and acquired a domicile of choice in Country X where you are entitled to live work. | Detailed Reasoning - Permanent place of abode: A person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. ( Applegate v. Federal Commissioner of Taxation 78 ATC 4051; 8 ATR 372 ( Applegate )). In Applegate , the court found that 'permanent' does not mean everlasting or forever but it is to be contrasted with temporary or transitory. The courts have considered 'place of abode' to refer to a person's residence, where he lives with his family and sleeps at night. In Applegate , the judge Fisher J made the following comments when analysing the expression 'permanent place of abode' To my mind the proper construction to place upon the phrase 'permanent place of abode' is that it is the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place. Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia (IT 2650) provides a number factors which are used by the Commissioner in reaching a satisfaction as to an individual's permanent place of abode. These factors include: (a) the intended and actual length of the individual's stay in the overseas country; (b) any intention either to return to Australia at some definite point in time or to travel to another country; (c) the establishment of a home outside Australia; (d) the abandonment of any residence or place of abode the individual may have had in Australia; (e) the duration and continuity of the individual's presence in the overseas country; and (f) the durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments, place of education of the taxpayer's children, family ties. Paragraph 24 of IT 2650 states that the weight to be given to each factor will vary with individual circumstances of each case and no single factor is conclusive. Greater weight should be given to factors (c), (e) and (f) than to the remaining factors. In your case your spouse will establish a permanent place of abode in Australia and you will share this place of abode on a regular pattern of visits to your family. You therefore have an intention to return to Australia from 20XX. You and your spouse will then establish a permanent place of abode in Australia. From that time you will divide your time between an abode in Country X and an abode in Australia. You will establish a variety of durable associations with Australia by establishing an abode, as well as your spouse seeking employment, arranging Australian schooling for your children and arranging financial affairs to fund such arrangements. Based on all the facts, the Commissioner is satisfied you and your spouse will establish a permanent place of abode in Australia which you will share with your family. Therefore you are considered a resident of Australia under this test. | Detailed Reasoning - 3. The 183 days 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. This test is applicable to new arrivals in Australia rather than those leaving Australia. In your circumstances your travel to Australia is to visit your spouse and children on a regular basis. You anticipate that these visits may accumulate to approximately 100 days per year. Hence you do not exceed this limit and this test does not apply in your circumstances. | Detailed Reasoning - 4. The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You are not a contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. You will not be treated as a resident under this test. | Detailed Reasoning - Residency status: As you satisfy two of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you would be considered a resident of Australia for income tax purposes for the relevant years should your spouse and children return to Australian to buy a home and resume residency as outlined in your application.

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