Private ruling: Residency status
Published: June 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | Yes.


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

Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. These tests are: · the resides test · the domicile test · the 183 day test · the superannuation test. The first two tests are examined in detail in Taxation Ruling It 2650: Residency - Permanent Place Of Abode Outside Australia . | Detailed Reasoning - Residence according to ordinary concepts: The primary test for deciding your residency status is whether you reside in Australia according to the ordinary meaning of 'resides'. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. There have been several court cases where residence according to ordinary concepts has been examined in detail. Overall, residence includes two elements: physical presence in a particular place and the intention to treat the place as home, at least for the time being, not necessarily forever. In Joachim v FCT [2002] ATC 2008, physical presence was determined to include whether or not the person has retained a continuity of association with a place, together with an intention to return to that place and an attitude that the place remains home. In a recent case Iyengar and Commissioner of Taxation [2011] AATA 856 (30 November 2011) (Iyengar's case) the AAT found the individual was a resident of Australia under the resides test because of his continuity of association with Australia by maintaining his jointly owned home in Australia and the fact that this spouse remained in that home in Australia. In reaching its conclusion the Tribunal considered the following factors: | Detailed Reasoning - Physical presence: · his family remained in Australia; · he transferred his employment income to Australia to pay his mortgage; · he returned to his home in Australia during holidays; · he retained most of his personal items in Australia; · his temporary and fixed employment contract (2 years); and · he did not purchase any substantial items of personal property whilst overseas. | Detailed Reasoning - Nationality: Ordinarily, the nationality of an individual does not weigh significantly in deciding the residency status of an individual. However, in borderline cases, this factor may play a role. | Detailed Reasoning - Maintenance of a place of abode: In Iyengar's case the taxpayer maintained a place of abode in Australia, being his family home, whilst he was employed overseas. The taxpayer also left behind in Australia some of his personal items, such as two motor vehicles, furniture and appliances, clothing and other household items. These factors were found to be indicative of him remaining an Australian resident. | Detailed Reasoning - Family and business ties with a country: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. In Iyengar's case the following ties that the taxpayer had with Australia were such that he remained a resident of Australia: · his family remaining in Australia (except for the short trip to Dubai by his wife); · he maintained his family home in Australia; · he used all his foreign income to make additional payments on his mortgage; and · his holidays in Australia were at his family home. | Detailed Reasoning - Applying the principles established in Iyengar's case to your circumstances: Due to a lack of employment opportunities in Australia, you left Australia to take up employment opportunities overseas in both country T and country Z. You have spent relatively short periods in Australia since taking up your overseas opportunities. During the periods that you were overseas your spouse and children remained in your Australian residence where some of your personal items have also remained. When you are not working overseas you return to your home in Australia. While overseas you live in accommodation provided by your employer's and built into your employment contract. You intend to return to country Z for an indefinite period. Physical presence ; · your family spouse and children have remained in Australia; · you return to your home in Australia during your time off work; · you have retained personal belongings in Australia; · your employment contracts are temporary and fixed in duration; and · you have not purchased any substantial items of personal property whilst overseas. | Detailed Reasoning - Nationality: You are a country Z citizen, however ordinarily this does not weigh significantly in deciding the residency status of an individual unless the case is a borderline case. | Detailed Reasoning - Maintenance of a place of abode: You have maintained a place of abode in Australia, being your family home, whilst you were working overseas. You also left behind in Australia some of your personal. These factors were found to be indicative of you remaining an Australian resident. | Detailed Reasoning - Family and business ties with a country: Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident. In your case the following ties that you have with Australia are such that you remain a resident of Australia: · your family has remain in Australia while you have been working overseas; · you have maintained your family home in Australia; and · you returned to your family home when you are not working overseas. | Detailed Reasoning - Result of residence according to ordinary concepts test: Despite your limited physical presence in Australia, based on the principles established in Iyengar's case we cannot overlook the fact that you have maintained a continuity of association with Australia, significantly, the maintenance of your family, home and personal items in Australia. Therefore, consistent with the principles established in Iyengar's case you continue to be a resident of Australia for taxation purposes under the 'resides test'. As it has been established that you are resident under the resides test there is no need to consider the remaining 3 tests. | Detailed Reasoning - Your residency status: As you are a resident of Australia under the 'resides test' outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are an Australian resident for income tax purposes for the income years included in this ruling.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You were born in country Z and are a citizen of country Z. | You moved to Australia and have a spouse and adult children who are all citizens of Australia. | Your Australian employee terminated your employment. | After the termination of your employment you unsuccessfully attempted to find other employment opportunities in Australia. | Although you were unable to find any employment in Australia your skills are in high demand overseas. | You left Australia to take up a research position at country T. | The assignment in country T concluded after a period of time. | You entered country T on a foreign worker visa. | While in country T you lived in a serviced apartment that is incorporated in your salary package. | After your assignment concluded in country T you took up a research position in country Z. | As you are a citizen of country Z you did not require a visa to enter country Z. | You worked in country Z for a short period. | While in country Z you lived in on-campus accommodations provided by your employer and integrated in your employment contract. | You returned to Australia at the completion of your assignment. | After a short period you returned to country Z arriving back in Australia at the completion of your assignment. | While you are overseas your spouse has remained in Australia to look after your children. Your spouse also provides tuition in Australia and therefore is unable to accompany you during school terms. In addition as your spouse is of country W origin is difficult for her to gain a long term visa in country Z. | Your spouse travels to country Z on a tourist visa when she can find the time | Your adult children are employed in Australia and therefore do not accompany you while you are overseas. | When you are in Australia you live with your spouse and children in your family home where some of your personal items have remained. | When you travel overseas you take with you items that you require to perform your employment duties for example books, computer, hard drive etc. | The assets that you hold in Australia consist of the following; | · a family home of which you jointly own with your spouse; and | The assets that you hold overseas consist of the following; | · an ancestral home (which is currently under dispute); and | · a bank account in country T and county Z. | Your sporting and social ties to Australia consist of your family and sporting club. | As country Z is your country of origin and you have lived there for the greater part of your life you have the following sporting and social ties; | · extended family who still live in country Z; | Your hobbies that you have in country Z include visiting temples and religiously significant places of interests. | You have paid tax to the governments of country T and country Z for the respective employment contracts that you have taken up. | You will return to country Z for an indefinite period.