Private ruling: Residency
Date of advice: 5 August 2016
Published: September 2016
Ruling period: Year ended 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Are you a resident of Australia for taxation purposes for the period you are Country Y? | Yes.

Relevant facts and circumstances: You were born in Country Y You came to Australia in XXXX. You have been a resident of Australia for taxation purposes since XXXX. You became a permanent resident of Australia in XXXX. You became a citizen of Australia in XXX. You have been working as a professional for a number of years in Australia. You have gone to Country y for personal reasons. You stay with family while in country Y. You do some casual work in Country Y. You will be in Country Y for 1-2 years. You return to Australia every 3-4 months to work and to visit friends and family. The duration of your trips back to Australia are 4-6 weeks. Your employer provides your accommodation when you are in Australia and you stay with friends and family when you are not working. You rent your home out in Australia on a X monthly lease. You store your car and personal belongings at a friend’s house. You maintain bank accounts and credit cards in Australia. You maintain all your professional memberships in Australia. You do not intend on leaving Australia on a permanent basis. You consider Australia your home.

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 have gone to Country Y for personal reasons. You return to Australia every 3-4 months for 4-6 weeks at a time to work and visit family and friends. You do not intend on leaving Australia on a permanent basis. Based on the facts above you are maintaining a connection with Australia while you are in Country Y. You are a resident under this test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the ‘domicile and permanent place of abode’ test as an alternative argument. | 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. 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 not satisfied that you have set up a permanent place of abode outside Australia for the following reasons: ● You stay with your family in Country Y in their home ● You return to Australia on a regular basis to work and to visit family and friends ● You do not intend on living permanently in Country Y ● Your home in Australia is only leased on a X month basis You are a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period you are in Country Y.