Private ruling: Residency
Date of advice: 3 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for taxation purposes for the 2016 income year? | A1: Yes.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. In the 2016 income year you worked outside Australia for your Australian employer in Country Z. You had a business visa to enter Country Z which did not allow you to remain permanently in Country Z. The visa was for 90 days and renewed when required for the XXX days you were working in Country Z in the 2016 income year. You lived in employer provided accommodation in Country Z which was for your sole use. Your Australian employer has withheld tax from your income in the 2016 income year. You have lodged as a resident of Australia for taxation purposes in previous income years. You spent XX days in Country Y in the 2016 income year. You enter Country Y on a 30 day tourist visa. Your spouse lives in Country Y. Your spouse has a house in Country Y. You are not allowed to own property in Country Y. You have personal items and a shared bank account in Country Y. You spent XX days in Australia in the 2016 income year on holiday. You have a bank account in Australia for your salary to be deposited into. You sold your main residence in Australia in 2014. You have been working in Australia in City A and City B since XX XXXX 2016. You will leave Australia and go to Country Y with your spouse in the 2018 income year. On your outgoing and incoming passenger cards you put work/holiday. You and your spouse are not 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. 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. In the 2016 income year you worked in Country Z for your Australian employer for XXX days. You spent time with your spouse in Country Y for XX days and XX days on holiday in Australia. You lived in employer provided accommodation in Country Z. Based on the facts above you were not residing in Australia according to ordinary concepts in the 2016 income year. | 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 is Australia. 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 were in Country Z in the 2016 income year for work purposes ● Your visa in Country Z would not allow you to remain permanently and was renewed every 90 days ● You were in Country Y for XX days in the 2016 income year ● You were in Country Y on a 30 day tourist visa which did not allow you to remain on a permanent basis in Country Y ● You are not able to own property in Country Y You are 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 not in Australia for more than 183 days in the 2016 income year. You are not 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 and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test. | Detailed Reasoning - Your residency status: You were a resident of Australia for taxation purposes in the 2016 income year under the domicile permanent place of abode test.