Private ruling: Residency status
Published: September 2017
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: You were born in Australia and are a citizen of Australia. You are single with no dependants. You departed Australia to live and work in Country Y for Entity C. You entered Country Y on a working visa and residence permit. This visa was supplied by your employer and is for a number of years, however it is required to be renewed in line with your employment contract. While in Country Y you lived in various locations. A number of years later, you accepted an employment assignment with Entity C. This meant that you were required to relocate to Country T. You entered Country T on a Country T work and residence permit. While in Country T you lived in a number of locations. Prior to leaving Australia you were living in rental accommodation with friends. Since your departure from Australia, you have only returned for limited periods for both work and holiday purposes. When you returned to Australia you stayed with family and friends for holidays and were provided accommodation from your employer when working. Your assets in Australia consist of rental properties, bank and credit card accounts. You have kept your bank accounts active in order to meet your mortgage commitments. Your overseas assets consist of household items. You are provided a car by your employer. You have not maintained any social or sporting ties to Australia. Your overseas social and sporting ties consist of participating in social playing and coaching sport. While in Country T you have obtained a drivers licence. You have lodged income tax returns for the 20XX, 20XX and 20XX income years. In these income tax returns you declared yourself to be an Australian resident for income purposes. In Country Y you paid taxes but did not have to lodge an income tax return because in all tax years you were not a “full year resident of Country T and therefore should not have to file an annual return” (i.e. you were absent from Country T for more than XY days in one trip and/or XY days cumulatively over the calendar year. The nature of your employment means that you had extensive work travel over that period and were therefore often outside of Country Y. You have not been in Country T long enough to lodge any tax returns yet. You informed the AEC that you were a no longer residing in Australia. You have never been an employee of the Commonwealth Government of Australia. Your intention is to live and work overseas indefinitely.

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

Reasons for decision: Summary: Section 995-1 of the 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. The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place of Abode Outside Australia . The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. | Detailed Reasoning - Your circumstances: From the information that you have provided you will not satisfy any of the 4 tests of residency and therefore are not a resident of Australia for income tax purposes. This is due to the fact that since your departure from Australian the Commissioner is satisfied that you have established a pattern of behaviour over the time spent in both Country Y and Country T that reflects a degree of continuity, routine or habit that is consistent with residing in those overseas countries. Although your Australian domicile remains unchanged the Commissioner is satisfied that you had established a permanent place of abode in firstly Country Y and now Country T. Further you have not have been present in Australia for a period of 183 days, and this pattern will continue in the future years of this ruling. Lastly you have never been employed by the Commonwealth Government of Australia. | Summary: Accordingly, as it has been determined that you will not satisfy any of the 4 tests of residency outlined under section under subsection 6(1) of the ITAA 1936 you are not a resident of Australia for income tax purposes for the years contained in this ruling.