Private ruling: Residency for taxation purposes
Date of advice: 30 June 2015
Published: June 2015
Ruling period: 1 July 20XX to 30 June 20ZZ.
Date scheme commenced: 1 July 20XX.

Ruling: Question and answer: | Were you a resident of Australia for taxation purposes from Date A until Date B? | No.

Relevant facts and circumstances: You are an Australian citizen. You left Australia on Date A and travelled to another country to work. Your spouse and children accompanied you. You returned to Australia with your spouse and children on Date B. Prior leaving Australia on Date A your permanent home was in Australia. You rented this home out while you were in the other country and did not have a place to live in Australia during the period you were away. You moved all your household effects to the other country. You paid income tax in the other country and lived in a rental property with your family. You had several short holidays in Australia during the period you worked overseas. Neither you nor your spouse has ever been an Australian government employee for superannuation purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 Section 6(1).

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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 (and permanent place of abode) 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. The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation 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'. As the word 'reside' is not defined in Australian taxation law, it takes it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Based on the facts of your case, the Commissioner consider that you were not residing in Australia according to the ordinary meaning of the word between April 20XX and 24 December 20YY. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. You obtained an Australian domicile when you became a citizen of Australia and will be a resident under this test for the period April 20XX until December 20YY unless the Commissioner is satisfied you had a permanent place of abode outside Australia during that time. Taxation Ruling IT 2650 - Income tax: residency - permanent place of abode outside Australia specifies that a 'permanent place of abode' does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives. In essence, Taxation Ruling IT 2650, specifies that a person's place of abode is where they live and is a question of fact to be determined in the light of all the factors a particular case. Based on the facts you have provided, the Commissioner is satisfied you had a permanent place of abode between April 20XX and December 20YY. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You left Australia on Date A, meaning you were in Australia for a total of more than 183 days for the financial year ending 30 June 20XX. Despite this, the 183 day test of residency does not operate to make you a resident of Australia for the whole of that financial year. Similarly, this test of residency does not operate to make you a resident of Australia for the whole of the financial year ended 30 June 20ZZ, despite the fact that your return to Australia on Date B meant you also spent more than 183 days in Australia in that financial year. | Detailed Reasoning - The superannuation test: The Commonwealth superannuation test does not apply to you or your spouse. | Detailed Reasoning - Conclusion - your residency status: You were not a resident of Australia for taxation purposes between Date A and Date B.