Private ruling: Residency for tax purposes
Published: December 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You were born in overseas. You are a citizen of both the overseas country and Australia. You came to Australia to live a number of years ago with your spouse. You obtained Australian citizenship a few years later. You are employed in Australia. You and your spouse spend approximately 6 months in the overseas country and 6 months in Australia. In the 2014 income year you were in the overseas country for X days and X days in Australia. You go to the overseas country to take care of your grandchildren during the summer and return to Australia during the overseas winter. You stay with your family when you are in the overseas country. You have the following assets in Australia: • Your home • Bank account • Super fund You have the following assets in the overseas country: • Rental property • Bank account You leave your home vacant in Australia when you are in the overseas country. Neither you nor your spouse are currently or have ever been commonwealth government employees.

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 are a citizen of both the overseas country and Australia. You spend approximately 6 months in both the overseas country and Australia. You go to the overseas country for the overseas countries summer to take care of your grandchildren and return to Australia for the overseas winter. You are employed in Australia. You leave your home in Australia vacant while you are in the overseas country. Based on the facts above you are residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Your domicile of origin is the overseas country and your domicile of choice 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 have set up a permanent place of abode outside Australia for the following reasons: • You stay with family when you are in the overseas country • You have a home in Australia • You spend approximately 6 months in the overseas country and 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 were in Australia for less than 183 days in the 2014 income year. 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. This test does not apply to you. You are not a resident under this test. | Detailed Reasoning - Your residency status: As you meet at least one the residency tests you were a resident of Australia for taxation purposes during the 2013/14 income year. As you are a resident of Australia and not a temporary resident you will be assessable on your worldwide income in Australia.