Private ruling: Residency for tax purposes
Published: July 2014
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2012

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


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: 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 first two tests are examined in detail in Taxation Ruling 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. 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'. In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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 with Australia compared to the foreign country concerned; and (viii) maintenance of a place of abode. The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In Shand v Federal Commissioner of Taxation 2003 ATC 2080, the Tribunal stated (at 35): Questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms. To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances. | Detailed Reasoning - (i) Physical presence in Australia: It is important to note that a person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Joachim v Federal Commissioner of Taxation 2002 ATC 2088 , the Tribunal stated (at 2090): 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. Further, in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA, the Tribunal stated (at 62): Physical presence in a country for some period during a particular year of income is usually considered by the courts as necessary in order that a person should be resident in that country during that particular income year. However, there have been exceptions to this: Rogers v Inland Revenue Commissioners (1879) 1 TC 225 and Slater v Commissioner of Taxation (NZ) (1949) 9 ATD 1. You went to Country Z to work. You do not intend on returning to Australia to live. When you have finished your work commitments in Country Z you intend on residing and working in Country X. | Detailed Reasoning - (ii) Nationality: You hold dual Country Y and Australian citizenship. | Detailed Reasoning - (iii) History of residence and movements: You lived and worked in Australia prior to taking up the work contract in Country Z. | Detailed Reasoning - (iv) Habits and 'mode of life': You went to Country Z a number of years ago for work purposes. You have no intention of returning to Australia to live. You have purchased a property in Country Z. You will move to Country X at the end of your work commitments in Country Z. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: You have returned to Australia once for Christmas since leaving Australia. | Detailed Reasoning - (vi) Purpose of visits to and absence from Australia: The purpose of your presence in Country Z is to live and work. You do not intend on returning to Australia to live and will reside in Country X at the end of your work commitments in Country Z. | Detailed Reasoning - (vii) Family, business and financial ties: Family No family members have accompanied you to Country Z. Business or economic As mentioned above you are living and working in Country Z and will retire to Country X at the end of your work commitments in Country Z. You do not intend on living in Australia. Assets You have bank accounts in Australia. You have an unpaid present entitlement in a Family trust. You own a home in Country Z. | Detailed Reasoning - (viii) Maintenance of a place of abode in Australia: You do not own a property in Australia and you do not have a home in Australia. | Detailed Reasoning - Summary of the resides test: As mentioned above, the weight given to each factor varies with individual circumstances, no single factor is necessarily decisive and the term 'reside' should be given a wide meaning. Based on the above, you do not maintain a continuity of association with Australia while you are overseas and are not residing in Australia according to the ordinary meaning of the word. | 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 to prove an intention to make his or her home indefinitely in that country. 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 satisfied that you have set up a permanent place of abode outside Australia for the following reasons: • You do not intend on returning to Australia at the end of your employment in Country Z • You have purchased a property in Country Z You are not a resident under this test. | Detailed Reasoning - The 183 day test: When 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 do not intend to be present in Australia for more than 6 months in any one financial year. 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 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. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are a non-resident of Australia for taxation purposes.

Relevant facts: You have dual Country Y and Australian citizenship. | You left Australia a number of years ago to take up a position in country Z. | You will move to Country X when you complete your work in Country Z. | You will be renewing your country Z visa annually until at least 2018. | You do not own any properties in Australia. | You have moved most of your personal items into a storage unit in Australia awaiting your move to Country X. | You have Australian bank accounts and you have notified the banks that you have ceased to be an Australian resident for taxation purposes. | You are a beneficiary of a Family Trust and have an unpaid present entitlement from the trust. You resigned as a director of the trustee company. | You and your spouse have been separated for a number of years. | You provide your spouse with subsistence support for living expenses. | Your spouse will not move to Country X with you. | Your child lives in Australia. | Your siblings live in the country Y and other relatives live overseas. | Since leaving Australia to live in Country Z you have returned to Australia to spend Christmas with your child. | You have had your name removed from the electoral roll. | Neither you nor your spouse, are eligible to contribute to a Commonwealth Super Fund.