Private ruling: Residency of Australia for Taxation purposes
Date of advice: 9 August 2018
Published: September 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: No

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You and your family went to Country Y in the 2018 income year for work purposes. You have a work contract in Country Y for 3 years. Your intention is to remain in Country Y for 3 years. You are not able to rent accommodation in your own name in Country Y. Your employer rents accommodation on your behalf. Your employer contributes some money to your accommodation expenses and you pay the remaining expenses. You have taken personal items to Country Y with you. Your family home in Australia was being rented out and has now been sold. You have a work visa for Country Y. The visa does not allow you to remain permanently in Country Y. You were not in Australia for more than 183 days in the 2018 income year. Your spouse does not work in Country Y. Your children are enrolled in school in Country Y. You pay tax in Country Y on your income derived in Country Y. Neither you nor your spouse are 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. Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms ‘resident’ and ‘resident of Australia’, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

ATO view documents: Taxation Ruling TR 98/17 – Income tax: residency status of individuals entering Australia | Taxation Ruling IT 2650 – Income tax: residency – permanent place of abode outside Australia | Taxation Ruling IT 2650A (Addendum) – Income tax: residency – permanent place of abode outside Australia