Private ruling: Residency
Date of advice: 25 September 2015
Published: November 2015
Ruling period: 30 June 2016 | 30 June 2017 | 30 June 2018
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: Your country of origin is Country Z. You are a citizen of Country Z and Australia. You became an Australian citizen in 20WW. Since you became a citizen of Australia you returned to Country Z to work for approximately one year from 20WW to 20XX You returned to Country Z to visit your family from 20XX to 20YY You are currently working for an Australian employer on a fly in fly out basis to Country X. When your contract to work in Country X ends, you plan to return to Australia. In Australia you stay as a boarder with friends. You plan to depart from Australia to work in an overseas country April 20ZZ on a contract. You will travel on a business or short term work visa. The visa will not allow you to stay in the country permanently. You intend to work in the overseas country for a period of 3 months to 2 years. You will have visiting rights to Australia if contract is for 12 months or more. You will keep your Medicare card when you depart Australia. You will enrol for postal vote with the Australian Electoral Commission. You will suspend your private health. When completing incoming and outgoing passenger cards on your flight to the overseas country, you will state that you are an Australian resident departing temporarily. You will lodge Australian income tax returns during the time you are overseas and will state that you are an Australian resident on the income tax returns. You will stay in shared accommodation provided by your employer with security services for the duration of the employment. All your properties in Australia are rented out. You have assets in Australia in the form of; Rental properties, shares, superannuation and bank accounts. Your household effects in Australia will either be used by your tenants or will be stored prior to your departure. Your personal effects in Australia will be stored in a lockable shed prior to your departure. You will not declare a capital gain or loss on any CGT assets that did not have the necessary connections with Australia when you depart Australia. You will receive rental income from Australian sources. You will not advise any Australian financial institutions including any Australian companies with whom you have investments with that you are a foreign resident. You will have a bank account overseas. You will not lodge any foreign income tax returns while living overseas. You do not have a spouse. You do not have any dependents. You will maintain your professional connection with Australia. You will not establish any professional, social or sporting connections in the overseas country. You may obtain a driving licence in the overseas country. You have not been employed by the Commonwealth of Australia. You are not a member of the Public Sector Superannuation Scheme (PSS) or an eligible employee in respect of the CSS. You will not have a job held for you in Australia.

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

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: 1. The resides test 2. The domicile test 3. The 183 day test 4. 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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'. As you are presently residing outside Australia, you are not considered to be residing in Australia. | 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. "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. This rule is subject to some exceptions. For example, a child takes the domicile of his or her mother if the father is deceased or his identity is unknown. A person retains the domicile of origin unless and until he or she acquires a domicile of choice in another country, or until he or she acquires another domicile by operation of law (Henderson v. Henderson [1965] 1 All E.R.179; Udny v. Udny [1869] L.R.1 Sc.& Div. 441; Bell v. Kennedy [1868] L.R.1 Sc.& Div. 307 (H.L.)) . In determining a person's domicile for the purposes of the definition of "resident" in subsection 6(1), it is necessary to consider the person's intention as to the country in which he or she is to make his or her home indefinitely. Thus, a person with an Australian domicile but living outside Australia will retain that domicile if he or she intends to return to Australia on a clearly foreseen and reasonably anticipated contingency. Generally speaking, persons leaving Australia temporarily would 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. Based on the following; • You plan to work for a non-Australian employer on a contract overseas. • You will travel on a business or short term work visa. • The visa will not allow you to stay in the overseas country permanently. • You intend to work for a period of 3 months to 2 years and return to Australia You have proved that you do not have an intention to make your home indefinitely outside Australia. Therefore the Commissioner is satisfied that you will have a domicile in Australia. 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. An intention to return to live in Australia in the foreseeable future does not prevent the taxpayer setting up a permanent place of abode elsewhere in the meantime. 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. Some of the factors which have been considered relevant by the Courts and Boards of Review/Administrative Appeals Tribunal and which are used by this Office in reaching a state of satisfaction as to a taxpayer's permanent place of abode include: • the intended and actual length of the taxpayer's stay in the overseas country; • whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time; • whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia; • whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; • the duration and continuity of the taxpayer's presence in the overseas country; and • the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. On balance as: • Your reason for leaving Australia is to work for a non-Australian employer on a contract. • You have assets in Australia in the form of; Rental properties, shares, superannuation and bank accounts. • You will have a bank account in the overseas country. • You will stay in shared accommodation provided by your employer with security services for the duration of your employment in the overseas country. • In Australia you stay as a boarder with friends. • You do not have a spouse in Australia. • You do not have any dependents in Australia • You will maintain your professional connection with Australia but do not have any sporting or social connection in Australia. • You will not establish any professional, social or sporting connections in the overseas country. Your ties to Australia are stronger and therefore the Commissioner considers that you will not establish a permanent abode outside Australia. As you have not proved that you have an intention to make your home indefinitely outside Australia and have not established a permanent place abode outside Australia, the Commissioner is satisfied that you do not have a domicile outside Australia. Therefore you will be an Australian resident for taxation purposes under this test. | Detailed Reasoning - The 183-day test: This test does not apply to you as it has been established that your usual place of abode will not be outside Australia. | 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 Commonwealth Government employees are eligible to contribute to the PSS or CSS. This test does not apply to you as you are not an employee of the Commonwealth Government of Australia. | Detailed Reasoning - Conclusion: As you meet the 'domicile and permanent place of abode' and '183 day' tests of residency, you will be a resident of Australia for tax purposes.