Private ruling: Residency
Date of advice: 14 June 2016
Published: August 2016
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for tax purposes for the relevant periods? | A1: Yes.

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. You were born in Australia. You and your spouse are Australian citizens and have no citizenship or permanent residency in any other country. You are in Country X on a visa. Your visa was sponsored by your employer. You left Australia for Country X on 1 July 20XX to take up employment. For a number of years you resided outside of Australia before returning. You would have left Australia permanently except your spouse remained in Australia. You sold all of your investment properties leading up to this date. Your spouse initially remained in Australia due to a prior arrangement. Your spouse was diagnosed with a medical condition and due to their condition worsening they remained in Australia. You plan to leave Australia indefinitely once your spouse is able. Since leaving to Country X your work schedule has you returning to Australia on a periodic basis to be with your spouse. You have advised the Australian Electoral Commission that you were departing Australia but you have not done so for Medicare because your spouse is still in Australia. You still have private health insurance as you have a family policy but it will be cancelled once your spouse leaves Australia. Your employer provides you with an accommodation allowance which you have used to lease a house in your name. You have exclusive use of this house. You maintain an Australian bank account that is in joint names with your spouse. You have not updated this account to be a non-resident account as your spouse remains in Australia. You maintain a motor vehicle for use by your spouse. You have no Australian investments and no Australian sourced income. You have a Country X bank account and credit card. You have a Country X tax file number and pay tax over there as a resident. You have taken personal effects with you to Country X but have left household goods with your spouse. You have purchased furniture and other household goods in Country X. You have no professional, social, occupational or sporting connections in Australia. You have not obtained any overseas qualifications whilst in Country X. In Country X you have a membership with a local club and many other professional and social connections.

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 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. The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered. 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 ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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'. Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are: • whether the person is physically present in that country at some time during the year of income • the history of the person's residence and movements • if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits • if the person is outside the country for part of the relevant income year, the purpose of the absences • the family and business ties which the person has with the particular country, and • whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there. Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. Presence within Australia You are physically present within Australia for approximately a third of your time. The rest of your time is spent working in Country X. History of residence and movements You resided outside of Australia for a period before returning. Since leaving for Country X you now return to Australia on your breaks. Frequency, regularity, duration and purpose of visits to Australian Since leaving to Country X your work schedule has you returning to Australia on a periodic basis. The sole purpose for you returning to Australia is for you to spend time with your spouse. This behaviour is indicative of a fly-in fly-out worker with a home in Australia. Family and Business ties You have strong family ties in Australia with your spouse residing here. You have strong business ties in Country X. Place of Abode You have a place of abode available in both Australia and Country X. You own property in Australia which is occupied by your spouse and yourself when you visit them. You also have a long term lease on a property in Country X which you use whilst there for work. Considering all of these factors whilst you spend the majority of your time in Country X you still spend a significant amount of time in Australia. The frequency and regularity of your trips to Australia are indicative of a fly-in fly-out worker. You do have strong business ties within Country X and you have historically spent little time within Australia. However, this does not override the fact that you have significant ties to Australia and a presence in Australia which is consistent with someone who resides here. Therefore, you meet the requirements of the resides test. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to 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. You are originally from Australia and are an Australian citizen. You do not hold citizenship in any other country. You spent a period outside of Australia adopting a domicile other that Australia before returning. On return to Australia you are taken to have adopted it as your domicile of choice. You moved from Australia to Country X. You hold a long term lease on a property in Country X for your sole use. You have purchased furniture and other household goods for this property. You have taken personal effects with you to Country X. You have stated that you do not intend to keep your domicile within Australia however you have provided no definite timeframe for when you intend to end your Australian ties. Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia provides information provides the ATOs view on what persons domicile is. Paragraph 21 of IT 2650 states that a person must prove their intention to leave Australia indefinitely and that a working visa even for substantial periods of time is not sufficient evidence of this intention. Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia (IT 2650) provides a number factors which are used by the Commissioner in reaching a satisfaction as to an individual's permanent place of abode. These factors include: (a) the intended and actual length of the individual's stay in the overseas country; (b) any intention either to return to Australia at some definite point in time or to travel to another country; (c) the establishment of a home outside Australia; (d) the abandonment of any residence or place of abode the individual may have had in Australia; (e) the duration and continuity of the individual's presence in the overseas country; and (f) the durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments, place of education of the taxpayer's children, family ties. Paragraph 24 of IT 2650 states that the weight to be given to each factor will vary with individual circumstances of each case and no single factor is conclusive. Greater weight should be given to factors (c), (e) and (f) than to the remaining factors. You have sought to establish a home outside of Australia by entering into a long term lease agreement. You sold all of your investment properties before leaving. You have stated that your intention is to stay overseas indefinitely however as per paragraph 25 of IT 2650 this is not conclusive and therefore must be considered in relation to all of the factors. You have stated that you intend to stay in the overseas country on a long term permanent basis however it is inappropriate to consider the actual length of time as there is no definitive end to the duration of your stay. You do have a place of abode in Australia as it is the property in which your spouse resides. You also have a strong durability of association with Australia due to your spouse's presence within the country. You demonstrate this with your schedule of returning to Australia on a consistent and periodic basis. You have informed the electoral commission of your non-resident status but you still hold public and private health insurance. You also maintain a car and have left household goods in Australia with your spouse. In the Engineering Manager and Commissioner of Taxation [2014] AATA 969 ( Engineering Manager ) case it was established that the information on immigration cards is not material to the fact of residency for tax purposes. It is not evident from your movements that you have made a permanent move from Australia to Country X considering the connections you still hold with Australia. Due to this your domicile is taken to be in Australia. Therefore, you meet the requirements of the domicile test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent place of abode is outside of Australia and they have no intention of taking up residence here. Whilst you have been in and out of Australia you have not been in Australia for 183 days or more in any income period. Accordingly, you will not meet the 183 day test. | Detailed Reasoning - The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Neither you nor your spouse, are a member of the PSS or CSS. Therefore, you do not meet the superannuation test. | Detailed Reasoning - Your residency status: Accordingly for the relevant period you are a resident of Australia for income purposes as you meet at least one of the residency test requirements outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA1997.