Private ruling: Residency for taxation purposes
Date of advice: 21 January 2019
Published: May 2019
Ruling period: Year ended 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: No 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. Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. In the 2018 income year you and your spouse went to Country Y to live and work. You entered Country Y on a spousal settlement visa which allows you to be in Country Y for 5 years and after 5 years you can remain permanently in Country Y. Your spouse has a home in Country Y which you are living in. Your children have gone to Country Y with you. You have started a internet business in Country Y. You intend on being in Country Y for at least 5 years and you may stay longer. You may return to Australia for visits with family and you will stay with family. You do not intend on being in Australia for more than 183 days in any financial year. You took all your personal items along with a lot of household items to Country Y. You and your spouse jointly own a property in Australia which is being rented out. Neither you nor your spouse are eligible to contribute to the PSS or the CSS Commonwealth superannuation funds.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)