Private ruling: International - residency
Published: May 2015
Ruling period: 1 July 2014 to 30 June 2015

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

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. Prior to departing Australia, you were a long term resident of Australia. You departed Australia, for an overseas country, on a permanent basis with your spouse and you declared you were a resident leaving Australia permanently. Your spouse commenced employment as company director of a company in an overseas country. The position will continue for an indefinite period. The company has operations in Australia and the Board Meetings are regularly conducted in Australia. You accompany your spouse on these occasions. When travelling to Australia with your spouse you stay with family and friends or at hotels. You have never stayed in the family home when visiting Australia. Upon leaving Australia you listed the family home for sale. However, due to the downturn in the luxury property market, you and your spouse have been unable to obtain an acceptable offer for the property. Whilst the home has been listed for sale, you employed house sitters to occupy and maintain the property. More recently a 12 month lease was entered into; a condition of this lease is that the property must be available for viewing by prospective purchasers. You and your spouse have entered into long term residential leases in the overseas country. You and your spouse acquired a luxury boat. The boat is moored on a permanent basis in a harbour of the overseas country under a long term agreement, and provides an alternative source of accommodation to you. You sold your Australian motor vehicle at or around the time of your permanent departure from Australia and acquired a motor vehicle in the overseas country for exclusive use by you and your spouse. You notified the Australian Electoral Roll of your change in address and removed yourself from the electoral roll. You have maintained bank accounts in Australia, these collect passive investment income. You have established bank accounts and credit cards in the overseas country. Your employment salary is deposited into these bank accounts. You cancelled your private health insurance in Australia and obtained private health insurance in the overseas country. You have taken out club memberships in the overseas country. You have been taxed as a resident of the overseas country and paid tax in Australia at the marginal rates applicable to non-residents. You have not spent more than 100 days in Australia in any given financial year. You are not eligible to contribute to a Commonwealth superannuation scheme. You have children, however they are all adults, and none of them are dependent on you. One of your parents was terminally ill, which required you to returns to Australia on a more regular basis. You may return to Australia on a permanent basis, later this year, to supervise renovations on the previous family home with the intention of remarketing the property for sale; however no firm arrangements have been put in place to that effect.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(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 and your spouse have moved to the overseas country on a permanent basis. Your spouse has employment in the overseas country. You are trying to sell the family home in Australia. You have notified the Australian Electoral Roll of your new overseas address and removed yourself from the roll. You rent accommodation in the overseas country. You have moved some of your belongings to the overseas country. You have opened bank accounts and credit cards in the overseas country. You have cancelled your private health in Australia and taken up private health in the overseas country. You have purchased a luxury boat in the overseas country. You have been lodging tax returns in the overseas country and pay income tax in Australia at the marginal rates for a non-resident. You have only returned to Australia to accompany your spouse on business trips and to see your terminally ill parent and other family members. Based on the facts above you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. 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. Your domicile of origin is Australia, however, based on the facts the Commissioner is satisfied that you have a permanent place of abode outside of Australia. You are not a resident of Australia for taxation purposes 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 have not been in Australia for more than 183 days in a financial year. You are not a resident of Australia for taxation purposes 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. You are not a resident of Australia for taxation purposes under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes.