Private ruling: Residency
Date of advice: 4 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2006

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period you were living and working in Country Y? | No.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. Your spouse was born in Australia. Your spouse is a citizen of Australia. You and your spouse left Australia to live and work in country Y a number of years ago. You had a one way ticket to country Y as you did not know how long you would stay in country Y. You had a right of abode visa and your spouse had an ancestry visa for country Y. You worked while you were in country Y and paid tax on that income in country Y. You lived in rented accommodation in country Y. Your children were born in country Y. You rented out your home in Australia for the period you were in country Y. You sold your household furniture and your car in Australia. You took clothing to country Y with you. You were not in Australia for more than 183 days in any financial year while you were in country Y. You and your spouse are not eligible to contribute to the relevant Commonwealth super funds.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1). | Income Tax Assessment Act 1936 Subsection 6(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 and your spouse went to country Y to live and work a number of years ago. You were in the country Y for approximately X years. You rented accommodation in country Y. You had your children in country Y. Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were living and working in country Y. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be 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 prove an intention to make his or her home indefinitely in that country. 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. Your domicile is Australia. The Commissioner is satisfied that you had a permanent place of abode outside Australia for the following reasons: • You were in country Y for approximately X years • Your spouse went to country Y with you • You lived in rented accommodation in country Y • Your children were born in country Y You were 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 in Australia for more than 183 days in any financial year while you were in country Y. You were 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 or your spouse is not eligible to contribute to the relevant Commonwealth super fund. You were not a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident of Australia for taxation purposes for the period you were living and working in country Y.