Private ruling: Residency
Date of advice: 14 September 2018
Published: November 2018
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you an Australian resident for taxation purposes? | A1: No

Relevant facts and circumstances: You are an Australian citizen but you were born in Country Y. You relocated to Country X many years ago. You married a national of Country X in Country X some years ago and you have a child together. You have been living in Country X on long term visas. You are satisfied that you have not been a resident of Australia since you moved to Country X. You reside in a residence owned by your spouse in Country X. Your spouse has ownership of most assets in Country X and you only have a bank account with a small sum in your own name in Country X. Your parent and adult children from an earlier marriage live in Australia. Since your move to Country X, you have spent a short amount of time in Australia each year to visit your children and spend some time with your mother and extended family. Your Australian sourced income comprises of dividends from shares in an Australian private company and rental income from investment properties. In early 20XX, you were diagnosed with a serious illness. Due to the better medical infrastructure in Australia, you relocated to Australia for the purpose of your medical treatment. Your spouse and child remained in Country X. While in Australia for your medical treatment, you stayed with your mother and spent time with your adult children and grandchildren. You were present in Australia for less than 183 days during the financial year ended 30 June 20XX. You purchased a house during the financial year ended 30 June 20XX. This house is for your parent to use as their home. Neither you nor your spouse is a member of an Australian Commonwealth government superannuation fund.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1)

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 and permanent place of abode test ● the 183 day test ● 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 a resident of Australia for tax 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 Commissioner may make reference to the following factors in determining whether a taxpayer is a resident under the ‘resides’ test: ● Physical presence in Australia ● Nationality ● History of residence and movements ● Habits and ‘mode of life’ ● Frequency, regularity and duration of visits to Australia ● Purpose of visits to or absences from Australia ● Family and business ties to different countries ● Maintenance of place of abode In your case, you have been residing in Country X for over many years and have been living with your spouse and child for some years. However, you returned to Australia for the purposes of seeking medical treatment for a serious illness for the last X months of the income year ended 30 June 20XX. Although you have a significant connection to Australia through your extended family and your income producing assets, it is considered that you only returned to Australia for a temporary period of time which was not enough to establish that you had resumed residing in Australia. Consequently, you remained a non-resident under the resides test of residency. | Detailed Reasoning - The domicile and permanent place of abode 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, in the period before you relocated to Country X, you had an Australian domicile because of your Australian citizenship. Since that time, you have been living in Country X using renewable visas which is not the same as legally changing your domicile. Consequently, you have not legally changed your domicile to Country X and have retained 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. In your case, you have been living in Country X for many years and have established a permanent place of abode in that country. Although you returned to Australia for a temporary period of time to seek medical treatment, this was of not enough significance to change the fact that your permanent place of abode was still in Country X. Consequently, the Commissioner is satisfied that your permanent place of abode remained outside Australia and you remained a non-resident under the domicile and permanent place of abode test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are 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 were present in Australia for less than 183 days during the year ended 30 June 20XX and the Commissioner is satisfied that your usual place of abode is outside Australia. | Detailed Reasoning - The superannuation test: An individual is still 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. You did not meet the requirements to be a resident under this test. | Detailed Reasoning - Your residency status: You were not an Australian resident for taxation purposes during the financial year ended 30 June 20XX.