Private ruling: Residency
Date of advice: 26 September 2015
Published: November 2015
Ruling period: 30 June 2015
Date scheme commenced: 1 July 2014

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

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y and commenced a work contract. You had a work visa and resident permit for Country Y. Your initial visa only allowed you to be in Country Y for 90 days and you were then required to leave Country Y to obtain a work visa which could only be issued from Australia. You returned to Australia. The Country Y embassy was closed over the Christmas period. You intended to be in Country Y for at least X years. You intended to work outside Australia for as long as you could get work and you would return to Australia to live at some stage in the future beyond 2018/19. Your work contract was for an indefinite period. You lived in employer provided accommodation in Country Y which was fully furnished and for your sole use. Your work contract ended prematurely and you came back to Australia. You did not maintain a home in Australia during the period you were in Country Y. You put your belongings into storage while in Country Y. You only had a car and bank account along with some shares in Australia. You did not have any assets in Country Y. You took clothing, footwear, laptop toiletries and mobilisation documentation to Country Y. You do not have a spouse. You have an adult child who is married and lives in Australia. You are not eligible to contribute to the relevant Commonwealth super 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. You went to Country Y for work purposes. You intended to be in Country Y for at least X years. Your contract ended prematurely and you returned to Australia. You lived in employer provided accommodation for the period you were in Country Y. Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were working in Country Y. | 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. 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. The Commissioner is satisfied that you had a permanent place of abode outside Australia for the following reasons: • You went to Country Y for at least X years • You lived in employer provided accommodation which was for your sole use • You took all relevant personal items with you to Country Y You are not 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 2015 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 are not eligible to contribute to the relevant Commonwealth super fund.