Private ruling: Residency for taxation purposes.
Date of advice: 5 April 2019
Published: May 2019
Ruling period: Year ended 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2017

Ruling: Question and answer | Are you a resident of Australia for taxation purposes from XX XXX 2017 to XX XXXX 2018? | Yes. | Are you a resident of Australia for taxation purposes from XX XXX 2018? | No.

Relevant facts and circumstances: You were born in Australia and you are a citizen of Australia. You and your spouse went to country Y on XX XXX 2017 to help out your church. You intend on being in country Y until 2021. You sold your main residence in Australia and you have retained your investment properties in Australia. Your young child has gone to Country Y with you and is being schooled in Country Y. Your adult child lives in Australia and did not accompany you to Country Y. You have come back to Australia to visit your child and parents every 3-4 months and you intend on returning to Australia in future income years every 6 months to visit your family. When you come back to Australia you stay in one of your rental properties. You initially entered Country Y on a tourist visa from XX XXXX 2017 until you were granted a residency visa on XX XXXX 2018. While on the tourist visa you stayed with friends in Country Y. You have purchased a lease hold property in Country Y. The paper work for the property in Country Y was finalised on XX XXX 2018. Currently your only source of income is from your rental properties in Australia and in Country Y. You intend on renting out your property in Country Y when you return to Australia in 2021. Initially you took clothes, toiletries and a lap top to Country Y with you. You have recently arranged for more clothes, tools, toys, books, kitchen items, motor cycle, office desk, set of drawers and washing machine to be sent over to Country Y. Other items remaining in Australia are being stored with family. You and your spouse are not eligible to contribute to the relevant Commonwealth Superannuation funds.

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 and your family went to Country Y in XX 2017 to help your church. You initially entered Country Y on a tourist visa until you were granted a residency visa on XX XXXX2018. You intend on being in Country Y until 2021. You sold your family home in Australia and have rental properties in Australia. Your child will attend school in Country Y. You took household items and personal items to Country Y. You have purchased a property in Country Y. The paper work for this property was finalised on XX XXX 2018. For the period XX XXX 2017 to XX XXXX 2018 you entered Country Y on a tourist visa. For the above period you were a resident of Australia for taxation purposes. From XX XXX 2018 the paper work for the property you purchased in Country Y was finalised and you were granted a residency visa on XX XXXX 2018. You are not residing in Australia according to ordinary concepts. You are not a resident under this test from XX XXX 2018. | 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 of origin 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. For the period XX XXXX 2017 to XX XX 2018 the commissioner is not satisfied that you had a permanent place of abode outside Australia because you were on a tourist visa and the paper work for the house you purchased in Country Y was not finalised until XX XXXX 2018. You stayed with friends in Country Y during this period. You were a resident of Australia under this test from XX XXX 2017 to XX XXX 2018. From XX XXX 2018 when the paper work for the house was finalised and you were granted a residency visa on XX XXX 2018 you are not 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 have not been in Australia for more than 183 days since leaving Australia. You do not intend on being in Australia for more than 183 days in future income years. You are not a resident under this test. | Detailed Reasoning - The superannuation 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. You are not eligible to contribute to the relevant Commonwealth super fund. | Detailed Reasoning - Your residency status: You were a resident of Australia for taxation purposes from XX XXXX 2017 when you left Australia until XX XXX 2018. You are not a resident of Australia for taxation purposes from XX XXXX 2018 when the paper work for your property in Country Y was finalised and you were granted a residency visa on XX XXXX 2018.