Private ruling: Residency
Published: March 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2014

Ruling: Question and Answer | Are you a resident of Australia for taxation purposes? | No

Relevant facts and circumstances: You have a registered business in the capital city of Country X. You purchased a three-bedroom apartment in Country X which is your residence. You own investment properties in Australia which have never been your residence. You return to Australia infrequently and only short term visits. If you return to Australia during a break, you do not perform any work-related duties. You do not have spouse in Australia. You are not a member of a Commonwealth superannuation scheme. You are in receipt of a pension and you pay tax on the pension and any income derived from your investment properties. You intend to stay and work overseas indefinitely.

Relevant legislative provisions: Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Summary: 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 (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, and • the superannuation test. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: 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'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and all the circumstances of the taxpayer are taken into account in arriving at a decision. In your case, there are various factors that indicate that you are no longer residing in Australia. Specifically: • you relocated to Country X; • you intend to live and work overseas indefinitely; • you have established your own accommodation in the capital city of Country X; and • you do not have a residence in Australia. Based on the information provided, it is considered that you are not residing in Australia according to the ordinary meaning of the word. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. In your case, your domicile of origin is Australia and there is no evidence you have chosen by law to establish a new domicile in Country X. Therefore, your domicile is still Australia. | Detailed Reasoning - Permanent place of abode: It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1852) E.R. 1477, Lord Campbell CJ stated that "a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression." In your case, there are various factors that indicate that you have established a permanent place of abode outside of Australia. Specifically: • you have lived and worked in Country X, • you purchased an apartment in the capital city of Country X which is your main residence, • you do not have a place to live in Australia. Based on the information provided, the Commissioner is satisfied that your permanent place of abode is outside of Australia. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year, unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here. You are not a resident under this test as you will not spend more than 183 days in Australia in an income year while you are based overseas. | Detailed Reasoning - The superannuation test: A person will be a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees. You are not a resident under this test as you are not employed by the Australian Commonwealth government. | Summary: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not an Australian resident for taxation purposes.