Private ruling: Residency
Date of advice: 13 July 2015
Published: July 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You are a country A citizen and you have permanent residency in Australia and country B. You have not had time to become an Australian citizen. You moved to country C with your spouse and children. You have entered country C on a dependent pass as your spouse has a work visa. The work visa and dependent pass do not allow you to live there permanently. It is your intention to return to Australia in the future. Your spouse is a non-resident of Australia for tax purposes and a resident of country C for tax purposes. You are not allowed to work in country C. You fly back to Australia to work occasionally, so that you can earn money to afford to live in country C. You have a family home in Australia which is rented out while you live in country C. You live in a rental property in country C. Your children have accompanied you to country C. You have moved most of your household effects to country C. You have social and sporting connections in Australia and in country C.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1936 subsection 6(1) | 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 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. You are a permanent resident of Australia and country A citizen. You, your spouse and children left Australia to travel to country B so your spouse could take up an employment opportunity. You are not allowed to work in country B so you fly back to Australia occasionally, to work, so that you can afford to live in country B. You have a home in Australia that is leased while you are in country B. Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were/are overseas. If a person's domicile is Australia will be 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 of origin is country A and your domicile of choice 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 set up a permanent place of abode outside Australia for the following reasons: • You have moved to country B indefinitely to live with your spouse and children. • Your spouse is a non-resident of Australia for tax purposes and a resident of country B for tax purposes. • You have moved most of your household effects to country B. • You only return to Australia to earn money so that you can afford to live in country B. 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. The Commissioner is satisfied that your usual place of abode is of outside Australia, therefore, 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 are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are considered to be a foreign resident of Australia for the period you are living in country B and working occasionally in Australia. You are not a resident of Australia for tax purposes.