Private ruling: residency
Published: December 2014
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes? | Yes


Relevant legislative provisions: Income Tax Assessment Act 1936 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 - (i) 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 living in country A returning to Australia on completion of your employment. | Detailed Reasoning - (iii) History of residence and movements: You have lived in Australia and have Australian Citizenship. You left Australia in 2013. | Detailed Reasoning - (iv) Habits and "mode of life": You commenced working in country A. You were living in rented accommodation. | Detailed Reasoning - (v) 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 when your employment was terminated early. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: The purpose of your absence from Australia was to work in Country A for a period of at least 2 years. You only returned to Australia when your employment was abruptly terminated. | Detailed Reasoning - Family: You were living in country A in rented accommodation. No family members accompanied you to the Country A. | Detailed Reasoning - Business or economic ties: You do not have any business ties in Australia. | Detailed Reasoning - Assets: You have a bank account, shares and own a property in Australia. | Detailed Reasoning - Maintenance of Place of abode in Australia: You own a property in Australia. You rented the property out while you were overseas. | 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; • your intention was to work in Country A for a minimum of two years. 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 have returned to Australia but your intention was to remain in country A for at least two years. You will not be a resident under the resides test of residency for the period 24 January 2013 to 1 July 2014. | Detailed Reasoning - The domicile test: If a person 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. Domicile is a legal concept to be determined according to the Domicile Act 1982 and to the common law rules which the courts have developed in the field of private international law. The primary common law rule is that a person acquires at birth a domicile of origin, being the country of his or her father's permanent home. You are an Australian citizen who owns a property in Australia. You have not applied for permanent residency outside of Australia. You have retained your domicile of birth. You have an Australian domicile. You have been living in rented properties in country A, for short periods. As you have an Australian domicile and do not have a permanent place of abode outside Australia you are a resident of Australia for tax purposes under this 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 a domicile in Australia and no permanent place of abode outside Australia you are a resident of Australia for tax purposes for the period you were overseas.

You are a citizen of Australia. | Your country of origin is Australia. | You have a Tier 2 (general) migrant visa. | Your purpose for moving overseas was for employment reasons. | Your employment in Country A ended abruptly. | You returned to Australia on completion of your employment. | You lived in rented accommodation when living overseas. | You own an apartment in Australia which you rented out while you were overseas. | You are not nor were you a Commonwealth Government employee.