Private ruling: Residency
Date of advice: 17 September 2019
Published: November 2019
Ruling period: Year ended 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you a resident of Australia for income tax purposes from the date you commenced your employment in Country Y on X XXXX 2019? | A1: No

Relevant facts and circumstances: You are a citizen of Australia. You commenced employment in Country Y on X XXX 2019 with a company. You are employed on a full-time permanent basis. You have an employment pass to work in Country Y which is for two years and can be extended. Your spouse and child have dependant's passes to enter Country Y which are for two years. Your spouse and children are remaining in Australia in the family home. Your spouse will travel between Australia and Country Y and will work remotely in Country Y. Your children will remain in the family home while they complete their studies. You are renting a property in Country Y. You have purchased household items for the property in Country Y. You have taken personal and household items to Country Y. You have set up an office in the rental property in Country Y for both you and your spouse to use. Your spouse will work from this office when she is in Country Y and will transition to living in Country Y on a more permanent basis. You have a Country Y mobile phone which your employer pays for. You intend on getting a Country Y driver's licence. You have social connections in Country Y. You have not returned to Australia during the period X XXX 2019 to XXXX 2019. You will make trips back to Australia for work and family reasons. These trips will not exceed 60 days in any financial year. It is anticipated that your trips back to Australia will reduce and your spouse and children will visit you more frequently in Country Y. You have advised various regulatory bodies, financial institutions and other services that you will be living overseas. You have notified your bank that you are a non-resident, and asked that non-resident withholding tax be deducted at source on your interest income. You have ceased making contributions to you and your spouse's self-managed superannuation fund. Your spouse, as an Australian resident and through a Power of Attorney, is solely responsible to manage and make the decisions for the fund. You intend on maintaining several bank accounts and credit cards in Australia to support your adult children who are studying at University. You and your spouse both hold shares in a company. As well as fully paid, ordinary shares, you also have performance rights and unlisted options which are due to vest over the next few years. You and your spouse jointly own your previous family home in Australia. You also hold other ASX listed shares. You and your spouse hold a joint investment portfolio, separate from your self-managed superannuation fund. You have notified the Electoral Commission that you are living overseas. You maintain your private health cover in Australia for your family. You have opened a bank account in Country Y. You intend on applying for a credit card in Country Y. You and your spouse are not eligible to contribute to the PSS or the CSS Commonwealth super funds. You intend on staying in Country X indefinitely.

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. 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: 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.