Private ruling: Residency
Published: September 2014
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes? | No

Relevant facts and circumstances: You hold dual Country B and Australian citizenship. Your country of origin is Country B. You left Australia for Country A. You were granted a work visa for Country A. The visa allows you to stay permanently if you wish. You have blood relatives who reside in Country A. You intend to reside overseas permanently. You have a house in Australia. One of your children is currently living in the house but will move out when they marry. The house will then be rented. You have sold or given away all your household items. You have no intention to return to Australia permanently. You return to Australia annually for around 4 weeks for holiday purposes to visit family and friends. You have no social or sporting connections with Australia. You have no social or sporting connections with Country A. You have notified the electoral office to have your name removed from the Australian electoral roll. You have notified your bank branch of your non-resident status.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6(1). | Income Tax Assessment Act 1997 Section 6-5.

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 (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 'resides'. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | 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'. 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'. In considering the definition of 'reside', the courts have stated that the word ' reside' should be given the widest meaning. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Koitaki Para Rubber Estates Limited v Commissioner of Taxation HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249): Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place , together with an intention to return to that place and an attitude that the place remains home . You have been employed and living in country A. You do not intend to return to Australia to live. | Detailed Reasoning - History of residence and movements: You have lived in Australia and had Australian Citizenship. You left Australia and have had ongoing employment in Country A since then. You have returned to Australia annually for holidays to visit your children. | Detailed Reasoning - Habits and "mode of life": You have been working in Country A. You are living in accommodation provided by your employer. You have permanent residency in Country B. | Detailed Reasoning - Frequency, regularity and duration of visits to Australia: Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country. You have returned to Australia annually for holidays to visit family and friends. | Detailed Reasoning - Purpose of visits to or absences from Australia: The purpose of your absence from Australia is to work in Country A on an indefinite basis. You do not intend to return to Australia to live. You have returned to Australia annually for holidays to visit family and friends. | Detailed Reasoning - Family: You will be living on your own in Country A. No member of your family will be accompanying you to Country A. | Detailed Reasoning - Business or economic ties: You do not have any business ties in Australia. You do not intend to return to Australia. | Detailed Reasoning - Assets: You have a house, car and bank account in Australia. | Summary: As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning. There are various factors outlined above which indicate that you will cease to be a resident of Australia. Specifically; • You will work in Country A. • You do not intend to return to Australia. • You have permanent residency status in Country B. Based on a consideration of all of the factors outlined above, you will not maintain a continuity of association with Australia while you are overseas. You do not intend to return to Australia and you have permanent resident status in Country B. Therefore, you will be not be residing in Australia in accordance with the ordinary meaning of the word. You will not be a resident under the resides test of residency for the relevant income tax years. | 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. 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. You are living and working in Country A in accommodation provided by your employer. You have permanent residency in Country B and have stated that you do not intend to return to Australia. The commissioner is satisfied that you have a permanent place of abode outside Australia. You are not a resident under the domicile 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 do not satisfy this test as you will be here for less than 183 days and do not intend to return at all. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally this would include a permanent or temporary employee of the Australian Public Service (APS). As you are not nor have been a Commonwealth Government employee, you are not considered to be a resident of Australia under the superannuation test. | Detailed Reasoning - Conclusion.: As you have left Australia to work and live in Country A indefinitely with no intention to return to Australia, you are not a resident of Australia for tax purposes.