Private ruling: Residency for tax purposes
Published: November 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | No .

Relevant facts and circumstances: You were born in Australia and you are a citizen of Australia. You left Australia to go to Country Y. Your spouse has accompanied you to Country Y. You have an employment contract for a number of years in Country Y. You had a work visa and permanent resident card for the first six months you were in Country Y. You now have a profession specific permit. The profession specific permit only allows you to be in Country Y for a limited number of days at anyone time. Each time you enter Country Y your employer arranges for a new permit for you. You will not be eligible for a permit once your employment ends. Your employer contributes US$XX to your accommodation requirements on a monthly basis. You own household affects and furniture in Country Y. Prior to going to Country Y you lived in a rented property in Australia. You have no permanent home in Australia. You own a rental property in Australia and have a bank account in relation to this property. You sold some of your belongings prior to going to Country Y and the remainder are in storage in Australia. You have taken extended leave from your employer in Australia. You have no social or sporting connections with Australia or Country Y. You have removed your name from the electoral roll. You have not notified Medicare or your health insurance company that you are a non-resident. You have not notified your bank you are a non-resident. Neither you nor your spouse have ever been Commonwealth Government employees. You are over the age of 16.

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: · Physical presence in Australia · Nationality · History of residence and movements · Habits and "mode of life" · Frequency, regularity and duration of visits to Australia · Purpose of visits to or absences from Australia · Family and business ties to different countries · 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. | 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 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. You have gone to Country Y to work. You have an employment contract for a number of years. | Detailed Reasoning - 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 were born in Australia and you are a citizen of Australia. | Detailed Reasoning - History of residence and movements: You lived and worked in Australia prior to going to Country Y. You lived in a rented property in Australia prior to leaving for Country Y. Your position in Australia is being held for you until you return from Country Y. | Detailed Reasoning - 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. You have gone to work in Country Y. You enter Country Y on a profession specific permit which only allows you to be present in Country Y for a limited number of days at any one time. You have a work contract for a number of years with your employer in Country Y. Your employer contributes $XX per month for your accommodation requirements. Your spouse went to Country Y with you. | Detailed Reasoning - Frequency, regularity and duration of visits to Australia: Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country. 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, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during period of two years and seven months to be residing in Australia. You have been back to Australia on a three week holiday since leaving for Country Y. | Detailed Reasoning - Purpose of visits to or absences from Australia: You have gone to Country Y to work. You have returned to Australia for a three week holiday. | Detailed Reasoning - 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. Your spouse has accompanied you to Country Y. You have a work contract for a number of years in Country Y and you are on extended leave from your Australian employer. | Detailed Reasoning - 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 do not maintain a permanent place of abode in Australia. | Summary: As stated above, it is important that no one single factor is decisive and the weight given to each factor depends on individual circumstances. The factors above indicate that you have not ceased to be a resident of Australia for taxation purposes, specifically; · You have gone to Country Y for work purposes. · You have an employment contract for a number of years in Country Y. · Your profession specific permit only allows you to be present in Country Y for a limited number of days at any one time. · Your employer contributes $XX per month for your accommodation requirements. Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you maintain a continuity of association with Australia for the relevant period. | 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. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. Your domicile of origin is Australia and you are not a resident of any other country. Therefore your domicile is Australia. 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. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. The Commissioner is not satisfied that you have set up a permanent place of abode outside Australia for the following reasons: · Your employer contributes $XX per month for your accommodation requirements in Country Y. · Your profession specific permit only allows you to be present in Country Y for a limited number of days at any one time. You are a resident under this test. | Detailed Reasoning - The 183-day test: When a person is present in Australia for 183 days or more 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 are not a resident under this test as you will not be in Australia for 183 days or more in a financial year. | 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. Only Commonwealth Government employees are eligible to contribute to the CSS and PSS. As you and your spouse were not a Commonwealth Government of Australia employee and you are over the age of 16 you will not be treated as a resident under this test. | Detailed Reasoning - Residency status: You are a resident of Australia for taxation purposes for the period you are in Country Y for work purposes.