Private ruling: Residency
Date of advice: 26 May 2017
Published: March 2018
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2016

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

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a citizen of Australia and Australia is your country of origin. You were granted permanent residency in country A in 20XY. You and your family moved to country A in 20XX. You entered country A on a tourist visa until your employment visa was processed. The tourist visa and employment visa did not allow you to live in country A permanently. The employment visa initially allowed you to stay for one year then subsequent visas were 2 years. Once you had # years of continuous visas you were able to apply for permanent residency. Your intention is to reside overseas permanently. You are permanently employed in country A. You do not have a job being held for you in Australia. You have returned to Australia several times since 20XX to visit family and friends and take holidays. You rent an apartment in country A. Your employer provides you with an allowance to assist with paying the rent and the remainder of the rent over and above your allowance is paid by you. You shipped all your belongings to country A. Your assets in country A include furniture, two motor vehicles, bank accounts and credit cards with country A banks. Your spouse and children moved back to Australia in 20XY. Your spouse and children returned to Australia for health and schooling issues. Your children have health issues and one has been hospitalised several times while living in country A. You have found over the years that the children’s health improves when they visit Australia. Your eldest child’s school in country A does not offer subjects that they want to study and has returned to Australia to study. Your spouse has returned to support family in Australia after a loss. Your spouse and children live in a property that you and your spouse own. You stay at this property when you visit them. Your assets in Australia include the property your family live in, joint bank accounts, and your spouse owns a car. You have advised Medicare or the Electoral Office that you are a foreign resident. You and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You have lodged Australian income tax returns as a non-resident for the last X years.

Relevant legislative provisions: 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 . 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 ● 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | 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 IT 2650 Income tax: residency - permanent place of abode outside Australia 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. You and your family moved to country A. You shipped all your belongings to country A. You rent an apartment in country A. It was your family’s intention to live together in country A on a permanent basis. You lived in country A on employment visas until you were able to apply for permanent residency which was granted in early 20XY. You and your family resided in country A together until 20XY when your spouse and children returned to Australia to live due to your children’s health, schooling needs and to support family in Australia. Your children had health problems that worsened while living in country A and schooling in country A could not meet the needs of your eldest child. It is still your intention to reside overseas permanently. You have not been residing in Australia according to ordinary concepts for some years due to your ongoing employment, living arrangements and intention to remain living and working overseas permanently. Although your family has returned to Australia, you have not re-established enough of a connection with Australia to show that you are now residing here. Therefore, you are still a non-resident under the resides test of residency. The domicile and permanent place of abode test If a person’s domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. 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. 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. Your domicile of origin is the Australia. Your domicile changed to country A when you became a permanent resident in 20XY. Therefore, you are a non-resident under this test from that time as your domicile is no longer in 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 satisfied that you had a permanent place of abode outside Australia prior to your change of domicile to country A. You are not a resident 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 were not and do not intend to be in Australia for more than 183 days in any of the applicable financial years. You are not a resident under this test. | Detailed Reasoning - The superannuation test: 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 and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test.