Private ruling: Residency
Ruling period: Year ending 30 June 2010 | Year ending 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 01 July 2009

Ruling: Q1: Are you an Australian resident for tax purposes? | A1: Yes


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

Reasons for decision: Summary: An Australian resident is defined in subsection 995-1 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 an Australian resident for income tax purposes. These tests are: 1. The resides test 2. The domicile test 3. The 183 day test 4. The superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650. Taxation Ruling IT 2650 states that the following factors need to be taken into account in determining the residency status of an individual:- · the intended and actual length of the individual's stay in the overseas country; · any intention either to return to Australia at some definite point in time or to travel to another country; · the establishment of a home outside Australia; · the abandonment of any residence or place of abode the individual may have had in Australia; · the duration and continuity of the individual's presence in the overseas country; and · the durability of association that the individual has with a particular place in Australia. 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 an Australian resident for tax purposes if they satisfy the conditions of one of the other three tests. | Detailed Reasoning - 1. The resides test: The ordinary meaning of the word 'reside', according to the dictionary definition, 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. We may take into account the following factors in determining where you reside: · intention or purpose of presence - your stated intentions will be in contrast to your intentions as shown through behaviour and actions; · family and business/employment ties - presence of family may indicate where you reside: · maintenance and location of assets - purchase and maintenance of assets can also indicate where you reside. Such assets can include a dwelling, motor vehicles and household effects. However, maintaining a place of residence is not the same as actually residing in that place; and · social and living arrangements. In your case, you were present in Australia for more than half the year. You were then located in the other country for short periods of time for a number of months. The total amount of time in the other country was less than a year. When you were not in the other country, you returned to your Australian property, staying with your spouse. When your project concluded in the other country, you returned to Australia and have been assigned to projects within Australia. Your history of movements does not show that you spend a considerable time in the one location. You have not been settled at a particular location for a continuous period of time. When you are outside the other country, you have returned to your home in Australia. You maintain family ties with Australia as you continue to hold your place of abode that you own with your spouse and to which you return to when in Australia. You have also not demonstrated intent to settle in a fixed overseas location. Therefore, as your spouse and assets are located in Australia, you have a durable association with Australia. Consequently, you are considered to be an Australian resident under this test. | Detailed Reasoning - 2. The domicile test: If a person is considered to have their domicile in Australia they will be considered to be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. | Detailed Reasoning - Domicile: Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to demonstrate both a change of residence and an intention of making the change permanently or at least indefinitely in that country. In your case, during your contract in the other country, you returned to Australia on a regular basis. You have not shown an intention to make your home indefinitely in a country outside Australia. Therefore, you are considered to have maintained your Australian domicile. | Detailed Reasoning - Permanent place of abode: 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 factors that are considered to determine your place of abode include: · intended and actual length of stay overseas, including the continuity of that stay · existence of an established home overseas · existence of a residence in Australia (while overseas) · family and financial ties. In your case, your contract in the other country was for less than a year. During this time you had to leave the other country a number of times as your visa only permitted you to remain in the other country for a very short period of time. When you left the other country, you returned to your residence in Australia which is maintained by your spouse. As you were in the other country for short visits over a period of less than a year, living in employer provided accommodation; it is considered that you have not established a permanent place of abode outside Australia. Consequently, you are considered to be an Australian resident under this test. | Detailed Reasoning - 3. The 183 day test: When a person is present in Australia for 183 days, whether continuously or intermittently, 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. Your usual place of abode is your customary habitual residence, house or home. It must exhibit the attributes of a place of residence or a place to live, as contrasted with an overnight, weekly or monthly accommodation of a traveller. In your case, you have been present in Australia for greater than 183 days of the year of income and the Commissioner is not satisfied that your usual place of abode is outside Australia and that you intend to take up residence outside Australia. Consequently, you are considered to be an Australian resident under this test. | Detailed Reasoning - 4. The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. In your case, you and your spouse have not been employed by the Commonwealth of Australia Government and are not eligible to contribute to the PSS or CSS. Consequently, this test is not applicable in determining your residency status. | Detailed Reasoning - Your resident status: You are considered to be an Australian resident as you satisfy the conditions of the resides test, the domicile test and the 183 day test outlined in subsection 6(1) of the ITAA 1936.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You are an Australian citizen. | Your country of origin is Australia. | You have been a works manager for a number of years. You returned to Australia periodically to see your spouse. | Your wife remains in Australia looking after your family property. She occasionally visits you overseas. This has been the pattern while you were a works manager. | From the start of the year of income to half way through the year you were located in Australia. For part of that time, you were engaged in a project in an Australian city for your employer. You were living in company provided accommodation. | You departed Australia for another country. | The purpose of your visits overseas is for work/employment. | Your intention is to remain overseas. | You were present in the other country for a number of short periods during the term of the contract. The contract lasted less than a year. | When you were not in the other country, you were located in your home city in Australia, staying with your spouse. | The reason for leaving the other country was the completion of the project there. Since that time, you have been assigned to a project in various locations in Australia for several months You were living in hotel accommodation provided by the client | You have held various visas from the overseas country since the start of the contract. Some visas overlap as new visas were applied for and issued to allow you to continue to stay in the country. You had to depart the other country on a regular basis as the country's authorities only issue visas for a maximum of some months. | You have a contract with your employer. This contract is open ended and can be extended to other assignments after the completion of work in the other country as you are in constant employment to your employer as a consultant. | In the other country, you are a consultant working on an agreed day rate. When your contract is renewed, the country where you will be located and the risks and conditions of your new location will be considered when negotiating a new day rate. | You work a day rate as there are no leave entitlements in your contract. | You worked a minimum of X hours and a maximum of YY hours per day, depending on operations activities, 7 days a week. If operations permitted, you did not work on Sundays. | You are not on a scheduled rotational work roster. | Your work location is an office in a city in the other country. Your position involves travel within the other country and periodic visits to the work site. | Your accommodation in the other country is provided by your employer. In the main city, it was an apartment. In the other city, it was a hotel room. | You have an Australian address. This property is jointly owned with your wife. | You have a permanent residence available to you in a third country. You stay in the third country if you do not return to Australia for business or personal trips. | You have overseas bank accounts in 2 countries. One of these accounts is in your name only. | You own shares jointly with your wife. | You have paid holding tax in the other country. You were informed that the other country imposes tax on wages earned in that country. You have requested but not received documentation in regards to tax in the other country. | You have no social or sporting connections with Australia or any other overseas country as you are working or travelling. | You and your spouse have not been a Commonwealth of Australia Government employee. | There is no tax treaty between Australia and the other country.