Private ruling: Residency
Date of advice: 10 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are an Australian citizen and country A is your country of origin. You moved to country B on #. You moved overseas to take up a work contract with your employer. Your spouse and child did not move with you due to personal circumstances. Your spouse and child moved within Australia to live with family until they were able to move overseas and live with you. You and your spouse separated on #. You entered country B on a resident visa. The residency visa allows you to live there provided you remain in employment. You did not intend returning to Australia to live. Your accommodation while in country B was in a hotel Your employer did not provide you with the accommodation, you paid for it yourself. You sold the family home in Australia before you moved to country B. Your personal belongings and household effects were sent to country B and kept in a container. You had a bank account and private health insurance in country B. You converted your Australian driver’s license to a country B licence. You returned to Australia on the following dates: # – # – Holiday. # - # – Returned to Australia for a personal matter. You believe you removed your name from the electoral role. You advised Medicare that you were leaving Australia permanently. You closed your Australian bank accounts. You are not eligible to contribute to the relevant Commonwealth super fund. You were present in Australia more than 183 days.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: ● resides test ● domicile and permanent place of abode test ● 183 day test and ● Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides’ test: (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. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. ● You moved overseas to start an employment contract. ● Your spouse and children remained in Australia. ● You intended to live and work in country B indefinitely. ● You have a residency visa which is valid subject to employment in country B. ● You returned to Australia to live approximately 6 months after you moved to country B. ● You visited Australia on two short occasions while living in country B. ● You lived in hotel accommodation in country B. Based on the facts above you remained a resident of Australia for taxation purposes, as you maintained a continuity of association with Australia. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the other three tests of residency. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be 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. Your domicile of origin is country A and Australia is your domicile of choice. 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. The Commissioner is not satisfied that you set up a permanent place of abode outside Australia for the following reasons: ● You lived in hotel accommodation in country B. ● Your spouse (later ex-spouse) and family remained in Australia. ● You could only remain in country B on your residency visa if you were employed there. You remained a resident under this test. | 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 were present in Australia for more than 183 days between 1 July 2015 and 30 June 2016 and the Commissioner has determined that your usual place of abode remained Australia. You remained a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You are not eligible to contribute to the relevant Commonwealth super fund. This is only a determining factor of residency where a person is an eligible contributor to one or both of these schemes. | Detailed Reasoning - Your residency status: You remained a resident of Australia for taxation purposes for the period you were in country B as you maintained your continuity of association with Australia.