Private ruling: Residency
Published: October 2013
Ruling period: Year ended 30 June 2013.
Date scheme commenced: 1 July 2012.

Ruling: Q1: Are you an Australian resident for taxation purposes? | A1: Yes.

Relevant facts and circumstances: The applicant has applied for a private ruling for their residency status during the relevant period. · You are not an Australian citizen. · You have lived in Australia for over twenty years. · You departed Australia in 20XX. · You went overseas to spend some extended time with your family. · You intend to return to Australia. · You returned to Australia from overseas to attend your sibling's wedding. · You are living overseas with your immediate family in rented accommodation. · You lived with your family in your own home before moving overseas. · You have rented your home out on a short term lease term. · You maintained your home while overseas. · You took your household effects overseas. · You maintained your Australian bank accounts. · You purchased household effects and a car overseas. · You have had a temporary job overseas on a X month contract. · You do not have a job in Australia to return to. · You are married with children. · Your immediate family are Australian citizens. · You do not have any sporting or community connections with Australia or overseas. · You have not held a position with the Australian Commonwealth Government and you are over the age of 16. · You did not advise any Australian bank that you hold accounts with, Medicare, or a health insurance provider that you were becoming a non resident. · You have not lodged a tax return overseas. · You stated on your outgoing passenger card that you were leaving the country to live overseas.

Relevant legislative provisions: Section 6(1) of the Income Tax Assessment Act 1936.

Reasons for decision: Detailed Reasoning - Residency: 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: · 'resides' test (ordinary concepts test) · domicile and permanent place of abode test; · 183 day test; and · Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. Where it is determined that a taxpayer 'resides in Australia' in accordance with the first test, there is no requirement to consider the other tests. The other three tests operate to broaden the definition of resident beyond the resides test. | Detailed Reasoning - The resides (ordinary concepts) test: 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 to different countries (viii) Maintenance of Place of abode. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in Taxation Ruling TR 98/17 residency status of individuals who enter Australia , and Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia. 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 relation to this the AAT has stated that: "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." We consider you maintained a continuity with Australia during the relevant financial year because: · You departed Australia to move overseas to spend some extended time with your family. · You intend to return to your family home in Australia. · You have not advised Medicare to have your name removed from their records. · You have lived in Australia for over past twenty years. · You were physically present in Australia for more than 6 months of the income year, you had a place in Australia that you intend to return to and that you consider your home. We consider the above facts indicate an intention to return to Australia and that Australia was still your home while living overseas. | Detailed Reasoning - (ii) Nationality: The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case. You are not an Australian citizen. We do not consider this issue places any weight one way or the other on any determination as to whether or not you were a resident of Australia for taxation purposes under the resides test in the relevant year. | Detailed Reasoning - (iii) History of residence: In Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 (Iyengar's case), the Tribunal noted that both past and subsequent history of a person's residence may be relevant in determining whether that person is ordinarily resident (for taxation purposes) in a country in a particular income year. You were living in your own home in Australia when, at some in 20YY, you and your spouse decided that it would be good for your family to spend some extended time with your family that live overseas. You left Australia to spend extended time with your family overseas during the relevant financial year. Since leaving Australia for overseas, you have returned to Australia to attend your sibling's wedding. As stated above, we consider your return to Australia to be an indicator that you maintained continuity with Australia during the financial year in question. We consider the above facts to indicate an intention to return to Australia and that you went overseas to spend extended time with your family and not to live permanently. | Detailed Reasoning - (iv) Habits and "mode of life": The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia. "Where the day to day behaviour of individuals, considered over time, is relatively similar to their behaviour before entering Australia, they are likely to be regarded as residing here. Even when their behaviour over time is different from their behaviour before entering Australia, they are likely to be regarded as residing here, when the facts of their presence indicate a routine establishing they are living in Australia." (TR 98/17). You have stated you purchased household effects and a car overseas. You have also stated that you have had a temporary job overseas on a X month contract to support your family while living there. Based on the information you have provided, we do not consider anything about your habits and mode of life during the relevant financial year to be inconsistent with you being a resident of Australia for taxation purposes in that year. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: In Lysaght v Inland Revenue Commissioners (1928) 13 TC 511 the Court noted that the mere fact that visits to a country are of short duration does not of itself exclude residence in that country. Since moving overseas, you have returned to Australia to attend your sibling's wedding. When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar's case also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not exclude an individual from being a resident in the country visited. Considering the above, we do not consider the relatively short duration of your return trip to Australia is sufficient to preclude you from being considered a resident of Australia for taxation purposes in each of those years. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: The details of your return trip to Australia from overseas are discussed above. As stated, we do not consider the brevity of that trip precludes you from being considered a resident of Australia for taxation purposes and the fact that you used that trip to attend a wedding is a clear indication that you maintained a continuity of association with Australia during the year in question. With regard to the purpose of your absence from Australia, we consider it to have been clearly to spend time with your family, as opposed to any purpose related to leaving Australia permanently. We have formed this view because: · You intended to return to Australia at some point in time. · You went overseas to spend some extended time with your family not to live permanently. · Prior to leaving for overseas you had been living in Australia for over twenty years. · You have a place in Australia that you intend to return to and that you consider your home. · You maintained your home while overseas. | Detailed Reasoning - (vii) Family and business ties to Australia and the overseas country or countries: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. Family You moved overseas to spend some extended time with your family. Prior to leaving Australia you were living with your spouse and children in your family home in Australia. Your immediate family members including your spouse and children accompanied you when you went overseas. You returned to Australia from overseas to attend your sibling's wedding. Business or economic You have had a temporary job overseas on a short term contract. Assets · You purchased household effects overseas, · You purchased a car overseas, · You own a home in Australia. · You maintained your Australian bank accounts, · You took your household effects overseas. · You plan to import your car back to Australia. Based on the evidence you have provided, you have no business ties as such to either Australia or overseas. However, we consider that you have maintained family ties with Australia since leaving for overseas due to you returning to Australia to attend your sibling's wedding, your immediate family members are Australian citizens and you were maintaining your family home while overseas. | Detailed Reasoning - (viii) Maintenance of Place of abode: The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer. You lived in your family home with your family before you left for overseas. This home is where you will return to when you return to Australia. Whilst overseas you have been maintaining your home through leaving money to sustain the mortgage payments in your absence and transferring further funds to cover the cost of renting the property out. Considering the above facts, we consider that you were maintaining a place of abode in Australia during the relevant financial year. | Summary: As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances. Although you have settled into life overseas and have been spending your time working and visiting family there are several factors outlined above which indicate that you have not ceased to be a resident of Australia. Specifically; · You intended to return to Australia at some point in time. · You went overseas to spend some extended time with your family not to live permanently. · Prior to leaving for overseas you had been living in Australia for over twenty years. · You were physically present in Australia for more than six months in the income year before you moved overseas. · You have a place in Australia that you intend to return to and that you consider your home. · You maintained your home while overseas. · You maintained your Australian bank accounts. · You have not advised Medicare to have your name removed from their records. · Your immediate family are Australian citizens. Based on a consideration of all of the factors outlined above you are a resident of Australia according to ordinary concepts as you maintained a continuity of association with Australia for the relevant period. | Detailed Reasoning - Other residency tests: Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the 183 day test, superannuation fund test and domicile and permanent place of abode tests. | Detailed Reasoning - Domicile and permanent place of abode: 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. IT 2650 states that: Persons leaving Australia temporarily would generally be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice. Application to the your circumstances You were born overseas and therefore your domicile of birth is another country. Thus, this test is not relevant to your circumstances as your domicile is not Australia. | Detailed Reasoning - 183 day and superannuation fund tests: 183 days 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. Superannuation funds tests An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You were present in Australia for a period of over 183 days during the relevant income year. Your usual place of abode is in Australia as this is where you have resided for over twenty years and where your family home is situated. Based on the consideration of the factors outlined above you are a resident of Australia according to the 183 days test for the relevant period. As you have never been an employee of the Australian government and your spouse is no longer eligible to contribute to the PSS or the CSS, the superannuation test does not apply to your circumstances. | Detailed Reasoning - Conclusion: You are a resident of Australia under the resides and 183 days tests.