Private ruling: Residency - leaving Australia
Published: February 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes? | No


Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1). | Income Tax Assessment Act 1997 Section 995-1(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 · 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 have been employed in Country A. You do not intend to return to Australia. | Detailed Reasoning - (iii) History of residence and movements: You have lived in Australia and have Australian citizenship. You left Australia to travel to country A. You have not returned to Australia since then. | Detailed Reasoning - (iv) Habits and "mode of life": You have commenced working in Country A. You are living with friends and have established a social network in Country A. You have applied for permanent residency in Country A. | 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 not returned to Australia during the period you have worked in 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 not returned to Australia during your period of employment overseas. | Detailed Reasoning - Family: No member of your family will be accompanying you to 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 bank accounts in Australia. You intend to withdraw the majority of your funds and transfer them to 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 have a job in Country A which is indefinite in duration. · you do not intend to return to Australia. · you have applied for permanent residency status. 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 and you have applied to be a permanent resident of Country A. 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 income tax year ending 30 June 2014. | Detailed Reasoning - Domicile Test: If a person is considered to have their domicile in Australia they will be considered 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. Your domicile of origin is country B. A domicile of choice is adopted when you become a citizen of a new country or apply for permanent residency in a new country. When you became an Australian citizen, your domicile of choice was Australia. You have now applied for permanent residency in country A. Your domicile of choice is now country A. As your domicile is now country A, you will not be a resident under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days or more 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 to Australia 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. Only Commonwealth Government employees are eligible to contribute to these schemes. You are over 16 years of age. As neither you nor your spouse 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 not met any of the tests of residency, you are not a resident of Australia for tax purposes.

You hold dual citizenship. | Your country of origin is outside of Australia (country B). | You left Australia for Country A. | You applied for and was granted a temporary work permit for Country A. | You have a job working in Country A and it is indefinite in duration. | You intend to reside permanently in Country A. | You have lodged an application for Country A permanent residency. | You hold a return airline ticket which you had to purchase to be allowed to depart Australia for Country A. You do not intend to use the return flight. | Since arriving in Country A you have not returned to Australia. | You are currently staying with friends from whom you are renting a room and board on a long term basis. | You do not have any property in Australia. | You have bank accounts in Australia. You intend to transfer the majority of these accounts to Country A. | Your university aged child will not be accompanying to Country A. | Neither you nor your spouse were Commonwealth Government employees.