Private ruling: Residency
Date of advice: 12 April 2017
Published: September 2017
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: July 20XX

Ruling: Q1: Are you an Australian resident for income tax purposes from Month X 20XX and Month Y 20XX? | A1: Yes.

Relevant facts and circumstances: On Month X 20XX you, your spouse and children departed Australia for Country X. Prior to Month X 20XX, you have been residing in Australia since birth. You are an Australian citizen. You have a Country X national ID card. Your children were born in Australia. Your parent and siblings were born in Australia. Your objective was for you and your children to experience living overseas in a non-English speaking country. You have been granted a Country X skills and talents visa (visa) which allows you and your family to stay in Country X for three years. The visa can be renewed for another three years. Due to a condition of the visa, you have completed a statutory declaration stating that you will return to Australia within six years. Your children are on the waitlist for three schools near your home in Australia. In Month X 20XX your home in Australia was rented out on a 12 month lease. All your personal items are in storage, some furniture items are in the home. You did not bring any personal items to Country X other than what could be brought on the airplane. On Month X 20XX you signed a 12 month lease for a X bedroom flat in Country X. Under the terms of the lease, you can vacate with no penalties by giving one month notice. You enrolled your children in the local primary school in City X in Month Z 20XX. You and your family travel extensively to nearby countries during school holidays. All your income is sourced in Australia. You are a co-director of X Australian companies. You have approximately X bank accounts in Australia. You own Australian Stock Exchange listed shares. You own a vehicle in Australia. All your friends are based in Australia. You have one bank account in Country X. All the mail to your Australian home is being redirected to your sibling in Australia. You are not employed in Country X. You own a vehicle in Country X. You have advised the Australian Electoral Commission that you will be overseas for a few years.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1), | Income Tax Assessment Act 1997 subsection 995-1(1) and | Domicile Act 1982 section 10.

Reasons for decision: Summary: You are an Australian resident for income tax purposes between Month X 20XX and Month Y 20XX. | Detailed Reasoning - Detailed reasoning: Subsection 995-1(1) of the ITAA 1997 defines an Australian resident as a person who is a resident of Australia for the purpose of the 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. These tests are: ● the resides test ● the domicile test ● the 183 day test ● the superannuation test The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), 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'. Since you moved to Country X in Month X 20XX and are still living there, you are not residing in Australia according to the ordinary meaning of the word. | Detailed Reasoning - The domicile test: Section 10 of the Domicile Act 1982 provides that “the intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country. In order to be deemed an Australian resident, the Commissioner has to be satisfied that your “permanent place of abode” is not outside Australia. “Place of abode” refers to your dwelling place or the physical surroundings in which you live ( R v Hammond (1852) 117 E.R. 1477 at p. 1488). Paragraph 23 of Taxation Ruling IT 2650 Income tax: residency- permanent place of abode outside Australia (Taxation Ruling IT 2650) emphasises that the following factors are relevant in determining whether a taxpayer has established a permanent place of abode: (a) the intended and actual length of the individual's stay in the overseas country; (b) any intention to stay in the overseas country temporarily and then move on to another country or to return to Australia at some definite point in time; (c) the establishment of a home outside Australia; (d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence. (e) the duration and continuity of the taxpayer's presence in the overseas country; and (f) the durability of association that the individual maintains with a particular place in Australia. In considering factor (a), it is noted that your intention was to assess your family's situation to determine whether your stay in Country X was enjoyable. Also, you advised that you have never formed an intention to make your home indefinitely outside Australia. During the start of your stay in Country X, you decided to allow you and your family six months to determine whether to continue staying in Country X or not. Your stay in Country X thus far is also not substantially long enough to conclude that you are a non-Australian tax resident. Due to a degree of uncertainty as to whether you and your family will be moving back to Australia during your first six months in Country X, and a continuing uncertainty due to the yearly assessment of your situation, factor (a) points to you being an Australian tax resident. In considering factor (b), you advised that you and your family will definitely return to Australia by the end of 20XX. This would amount to quite a significant period overseas of approximately five and a half years. Looking at this factor alone, it points to you being a non-resident of Australia for tax purposes. In relation to factor (c), it is not unreasonable to conclude that a home has been established outside Australia through rental of the flat in City X. However, since personal belongings and furniture remain in Australia and were not brought to City X and the only items you and your family took were those accepted on the airplane, it seems that a home has not been properly established outside Australia. This factor points towards you being an Australian tax resident. In relation to factor (d), you and your family have abandoned your Australian home due to the move to Country X. This factor points towards non-Australian tax residency. In considering factor (e), your duration of time that will be spent staying in Country X is uncertain since you assess your situation yearly. The continuity of your stay in Country X has also been broken through extensive trips to various countries during school holidays. This factor points towards you being an Australian tax resident as there is uncertainty around the duration as well as a lack of continuity of your stay in Country X. In relation to factor (f), the following facts are relevant: ● your Australian citizenship; ● your children being on waitlists for Australian schools; ● all your personal items being kept in storage and some furniture items being in the Australian home; ● all your income is Australian sourced; ● you are a co-director of X Australian companies; ● you have approximately X bank accounts in Australia; ● you own Australian Stock Exchange listed shares; ● you own a vehicle in Australia; ● all your friends are based in Australia; and ● all the mail to your Australian home is being redirected to your sibling in Australia. The above listed facts show that you have a strong association with Australia, one that is substantially stronger than your association with Country X. This factor points to you being an Australian resident for tax purposes. Paragraph 24 of Taxation Ruling IT 2650 states that while no single factor will be decisive, factors (c), (e) and (f) seem to hold the greatest weight. In assessing your situation, factor (a) together with the factors given the most weight- (c), (e) and (f) show that you are an Australian resident for tax purposes while the factors which carry lesser weight- (b) and (d) point towards you being a non-Australian resident for tax purposes. Based on the assessment under the domicile test, you are an Australian resident for income tax purposes between Month X 20XX and Month Z 20XX. There is no need to examine the remaining tests.