Private ruling: Residency
Date of advice: 31 July 2015
Published: July 2015
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: The scheme has commenced

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | Yes.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You moved to a foreign country to live with your spouse. You have had a number of jobs in a foreign country. Applications to become permanent residents of a foreign country cannot be made until a person has resided in a foreign country for at least several consecutive years. You were granted permanent resident status in a foreign country. You have jointly owned your principal residence in a foreign country since arriving. Initially this was a dwelling. Once you became permanent residents of a foreign country, you sold your dwelling and jointly purchased a new principal residence. When visiting Australia, your foreign country residence remains vacant. You purchased an investment property in Australia. You have no children. You returned to Australia to provide emotional and financial support to an ill person. You commenced work in Australia to financially support your unexpectedly long stay in Australia. You visit your spouse occasionally in a foreign country. However, as the ill person's condition deteriorated, this became less feasible. You and your spouse purchased a property in Australia for you to live in while supporting ill person. No assets were relocated from a foreign country. The furnishings for the house were purchased locally. On the death of an ill person, the house and all furnishings will be sold and you will return to your home in a foreign country. You have bank accounts are in a foreign country. You have an Australian bank account for your Australian salary to be deposited into. You and your spouse have a joint bank account have in Australia used to manage the mortgage on the rental property, until its disposal. You also have a joint account used to manage an investment in a property unit trust. You and your spouse have been members of a club in a foreign country. You have no intention of relocating back to Australia. When completing the Australian Immigration Outgoing passenger card you stated as the reason for going overseas that you were Australian residents departing Australia permanently. On arrival to Australia you state that they are visitors to Australia and visiting relatives on their inbound passenger cards. Neither you nor your spouse has ever been eligible to contribute to a Commonwealth Government of Australia superannuation scheme. You are over 16 years of age.

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

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 first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 (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 IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. There are several factors outlined above which indicate that you have ceased to be a resident of Australia, specifically: • you returned to Australia to care for an ill person but will return to live with you in a foreign country after an ill person passes away • your spouse remains in a foreign country but visits you and an ill person for short periods; at the times your spouse visits you in Australia a foreign country residence remains vacant • you purchased jointly with your spouse a property in Australia for your to live in while you support an ill person; no assets were relocated from a foreign country and all furnishings were purchased locally • you commenced work in Australia to financially support your unexpectedly long stay • when an ill person passes away, the house and furnishings will be sold and you will return to your home in a foreign country Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the relevant period. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. You are still an Australian citizen while living in a foreign country. However, you have obtained permanent residency in a foreign country, consequently your domicile of choice is now a foreign country. | Detailed Reasoning - Permanent place of abode: 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. In your case, • you have lived with your spouse in a foreign country for several years • you became permanent resident of a foreign country • initially you lived in a dwelling then you purchased another dwelling; both owned jointly with your spouse • you returned to Australia to care for an ill person • you purchased jointly with your spouse a property in Australia for you to live in while you support an ill person; no assets were relocated from a foreign country and all furnishings were purchased locally • you commenced work in Australia to financially support your unexpectedly long stay • after an ill person passes away, the house and all furnishings will be sold and you will return to live with your spouse in your home in a foreign country The Commissioner is not satisfied you have a permanent place of abode outside of Australia. As you have bought a residence in Australia and have been living there several years, you have re-established a permanent place of abode in Australia, Even though your intention is to sell it and move back to a foreign country after an ill person, a permanent place of abode does not have to be everlasting or forever. Therefore, you are a resident of Australia under the 'domicile and permanent place of abode' test of residency. | Detailed Reasoning - The 183-day test: Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, 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. In your case, • you have lived with your spouse in a foreign country for several years • you returned to Australia to care for an ill person • you and your spouse purchased a property in Australia for you to live in while supporting an ill person; no assets were relocated from a foreign country and all furnishings were purchased locally • you commenced work in Australia to financially support your unexpectedly long stay • after an ill person passes away, the house and all furnishings will be sold and you will return to live with your spouse in your home in a foreign country You have been present in Australia for a total period of more than half of the some of the years of income and the Commissioner is not satisfied that your usual place of abode is outside Australia. Therefore you are a resident of Australia under the 183-day test. | Detailed Reasoning - The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (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 have stated that neither you nor your spouse is eligible to contribute to the PSS or the CSS. Further, you are more than 16 years of age. Therefore, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Your residency status: As you are a resident of Australia under two of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes.