Private ruling: Residency
Date of advice: 11 October 2018
Published: December 2018
Ruling period: Xx xx 20xx to xx xx 20xx
Date scheme commenced: Xx xx 20xx

Ruling: Q1: Are you a resident of Australia for taxation purpose? | A1: Yes

Relevant facts and circumstances: You are an Australian citizen. You left Australia in 20xx to take up employment with Country A’s Government. You were originally employed on 1 year contract under a work visa. Your visa has been extended to 20xx. You will accept a contract extension until 20xx. You have also applied for and been granted a number of permits which are required in Country A for access to various locations. Your employer provides and pays for your accommodation in Country A. You have purchased furniture, appliances and other household items to make the provided accommodation liveable. Since moving to Country A, you have returned to Australia x times for x period of time. You have applied for and been granted a Country A health card. You have opened bank accounts in Country A. You don’t have a driver’s licence in Country A. In Australia, you jointly own a house with your spouse. The address of this house remains your mailing address. Your family lives in the house and you have kept your household furniture in this home. You use the Australian mail services if you are unable to receive documents or parcels electronically. Your spouse transports them to Country A. You sold your car before moving to x. You remain responsible for several mortgages for jointly owned houses in Australia. You have a rental property and a holiday home in Australia. You have retained you private health insurance in Australia. You continue the use of your Australian credit cards and bank accounts. You were a member of the x until 20xx. You are entitled to a x pension, but you are not a contributing member of the Public Sector Superannuation Scheme or the Commonwealth Superannuation Plan. You have a superannuation policy in Australia. You are the principal of a company. You have resigned from some Australian memberships as you do not envisage being able to avail yourself of their membership benefits in the future because you are overseas. You ceased to act as an adviser to several companies in Australia. You have maintained no professional or occupational memberships in Australia. You have recorded your Australian address when traveling on the passenger cards. The following question on the form is ‘Do you intend to live in Australia for the next 12 months’. You have responded no to that question.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 995-1 | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision: Summary: 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 (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' and 'permanent place of abode' test ● the 183 day test; and ● the Commonwealth superannuation fund test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. | 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 its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. 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 with Australia compared to the foreign country concerned; and (viii) Maintenance of a place of abode. To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. In your circumstances: | Detailed Reasoning - (i) physical presence in Australia: Since starting work in Country A you have returned in average x times a year in Australia for duration ranging from x to x weeks in the relevant income years. Despite your limited presence in Australia, you have maintained a place of residence in Australia including personal items. This address is still your mailing address and the address you declare on the passenger card when traveling. You have also retained a continuity of association with Australia with banks accounts, credit cards, superannuation and mortgages. Upon completion of your work contract in Country A you will return to Australia. | Detailed Reasoning - (ii) nationality: You are an Australian citizen. | Detailed Reasoning - (iii) history of residence and movements: Prior to your departure to x in xx 20xx you resided in Australia and you have maintained your family home and strong ties in Australia during the relevant years. | Detailed Reasoning - (iv) habits and ‘mode of life’: In the relevant income years you spend the majority of your time living in Country A for your work. You have purchased furniture, appliances and other household items for your home in x. You have ongoing living expenses such as food in Country A. You don’t have to pay rent in Country A. Your income is also used to meet your obligations in Australia, including mortgages and credit cards debts. | Detailed Reasoning - (v) frequency, regularity and duration of visits to Australia: You have visited Australia on x occasions in a x month period. You stayed in average x weeks each time. Despite the short duration of your visits, you frequently and regularly visit Australia | Detailed Reasoning - (vi) purpose of visits to or absences from Australia: Since moving to Country A, you have returned to Australia as per the above dates for appointments and to visit your family . | Detailed Reasoning - (vii) family and business ties with Australia compared to the foreign country concerned: Your personal ties are in Australia. You also have a business in Australia. Your only tie with x in the relevant years is your employment. | Detailed Reasoning - (viii) Maintenance of a place of abode.: You have a furnished home in x as part of your work agreement. It is clear from the evidence that you retain a place of abode in Australia (x) whilst working in Country A. You have retained your furniture and appliances in Australia. You use your earnings from your work in Country A to pay down your mortgages in Australia. | Detailed Reasoning - Conclusion: After considering all the facts and evidence, the Commissioner considers that you are an Australian resident for tax purpose as your actions are not sufficient to substantiate that you have made Country A your home of choice. It is clear that you have maintained a place of residence in Australia and retain a continuity of association with Australia. Having reached this conclusion, it is unnecessary for the Commissioner to consider whether you were and are a resident in the relevant period under any of the three additional statutory tests in section 6(1)(a) of the ITAA 1936. However, for completeness, the Commissioner will briefly examine these tests and how it considers it would have applied to the facts in your particular case if it had not found you to be a resident according to ordinary concepts, as discussed above. | Detailed Reasoning - Domicile and permanent place of abode: Domicile If an individual has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. There are three types of domicile that an individual can have: ● the domicile of origin; ● the domicile of choice; and ● the domicile of dependency. A domicile of dependency will normally only exist in relation to minors or individuals who are of unsound mind. This domicile type is not relevant in your circumstances. Your domicile of origin is generally where you were born. In order to show that you have chosen a new domicile (domicile of choice), you must be able to prove an intention to make your home indefinitely in a new country. There must be both the act and the intention to select a new jurisdiction as your permanent home, for example, applying for permanent residency in another country. Based on the facts and evidence your domicile of origin is Australia and you never adopted another domicile of choice in the relevant income years. Permanent place of abode outside Australia The other component of this test rests on the Commissioner being satisfied that you have established a permanent abode outside Australia. 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. The term ‘permanent’ is not used in the sense of unending, but is used in contrast to temporary or transitory. Generally speaking, an individual who leaves Australia with an intention of returning at the end of a transitory stay overseas would remain a resident of Australia for income tax purposes. Taxation Ruling IT 2650 Income Tax: Residency – Permanent place of abode outside Australia states the following factors are relevant in determining a person’s permanent place of abode: ● the intended and actual length of the individual’s stay in the overseas country ● any intention to return to Australia at some definite point in time or to travel to another country ● the establishment of a home outside of Australia ● the abandonment of any residence or place of abode the individual may have had in Australia ● the duration and continuity of the individual’s presence in the overseas country, and ● the durability that the individual has with a particular place in Australia. Despite the length of time you have spent and you are planning to spend in x, you did not establish a permanent place of abode in x or anywhere else outside Australia in the relevant income years. You have not abandoned your family home in Australia. You are a resident under this test. | Detailed Reasoning - The 183-day test: Where you are present in Australia for 183 days during the year of income you will be a resident, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. You were not present in Australia for at least 183 days in the relevant income years. You are not a resident under this test. | Detailed Reasoning - The superannuation test: This test covers Commonwealth government employees - members of the Commonwealth superannuation funds (as well as their spouses and children under 16 years of age). A person is a resident under this test if they are: ● a member of the superannuation scheme established by deed under the Superannuation Act 1990; or ● an eligible employee for the purposes of the Superannuation Act 1976; or ● the spouse, or a child under 16, of a person covered by either of the above. You are not a resident under this test. | Detailed Reasoning - Residency status:: As you satisfy two of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you remain a resident of Australia for income tax purposes for the relevant income years.