Private ruling: Your residency status
Date of advice: 29 March 2017
Published: August 2017
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20ZZ
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you a resident of Australia for taxation purposes for the 20YY and 20ZZ income years? | A1: Yes.

Relevant facts and circumstances: You are an Australian citizen. You have been a permanent resident of Country Y for a number of years. Prior to 20WW you and your spouse were living in Country X as your spouse was posted there. You were living in Country Z for a number of years with your children and your spouse returned to Australia to live. You lived and worked in Country Z and rented accommodation in Country Z. You worked for a company in Country Z. Your children attended childcare in Country Z. Your spouse made a financial contribution to your living expenses. Your spouse was notified that they were being posted to Country U and Country Y and would be required to work in Australia for 12 months before being posted overseas. You and the children returned to Australia to live with your spouse for 12 months prior to going overseas with them on their posting. You rented accommodation in Australia. Your spouse owns a property in Australia which was being rented out during this period. You transfer from the company in Country Z to the company in Australia. You worked from home in Australia and your duties were the same as when you were working for the company in Country Z. You worked from home in Australia and then moved to Country U with your spouse on their posting. You transferred to the company in Country U and will transfer to the company in Country Y when you move there in July 20ZZ. You have never been a Commonwealth Government employee. Your spouse is a Commonwealth Government employee and contributes to the PSS super fund.

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. As you are the spouse of a contributing member of the PSS super fund we will firstly consider the Commonwealth Superannuation fund test before providing an explanation of the remaining 3 tests. | Detailed Reasoning - The Commonwealth superannuation fund 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. Your spouse is a Commonwealth government employee and is a contributing member of the PSS super fund. As the spouse of a Commonwealth Government employee and the spouse of a contributing PSS member you are a resident under this test. You will be a resident under this test even if you do not meet any of the other 3 tests of residency. | 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 family were living and working in Australia during the 20YY and 20ZZ income years. You were working for a company in Australia and had transferred from the Country Z branch. Based on the facts above you were residing in Australia according to ordinary concepts during the 20YY and 20ZZ income years until you left Australia. After you left Australia you will remain a resident of Australia for taxation purposes as you are the spouse of a contributing member of the PSS Commonwealth superannuation fund. | 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 set up a permanent place of abode outside Australia because you were living and working in Australia during the 20YY and 20ZZ income years. Prior to returning to Australia you were working in Country Z and after you left Australia in the 20ZZ income year you went to Country U as your spouse is posted there. You will then move to Country Y for another posting. You were a resident of Australia for taxation purposes under the domicile test for the period you were living in Australia up until you left Australia. As discussed above you will remain a resident of Australia for taxation purposes as you are the spouse of a contributing member of the PSS Commonwealth Superannuation Fund for the period you are living outside Australia. You are 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 are a resident under this test for the period you were living in Australia during the 20YY and 20ZZ income years. You will remain a resident of Australia for taxation purposes for the period you are living outside Australia as you are the spouse of a contributing member of the PSS Superannuation fund. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes under each of the tests of residency for the 20YY and 20ZZ income years. A taxpayer who is a resident of Australia for taxation purposes is required to declare their world-wide income in their Australian tax return. Any Double Tax Agreement (DTA) that Australia has with the overseas country also must be considered when determining where income from outside Australia needs to be declared. For the whole period you have been a spouse of a Commonwealth government employee who is a contributing PSS member you were a resident of Australia for taxation purposes and required to declare your world-wide income in your Australian tax return.