Private ruling: Residency
Date of advice: 25 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | No.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went to Country Y in the 2015 income year and commenced work for a Country Y company. Your family accompanied you to Country Y. You took your belongings and household items to Country Y along with your dogs. You purchased two cars a fridge and a bed in Country Y. You had a rental property in Australia which was tenanted and then was sold. You suspended your health insurance in Australia. Your employment contract was permanent. You paid tax on your income in Country Y. You were made redundant from your job in Country Y and you returned to Australia in the 2016 income year. It was your intention to move indefinitely to Country Y. You and your spouse are not eligible to contribute to the PSS or the SS super 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 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 a resident of Australia for income tax purposes. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936. The income you derive in Country Y will be foreign sourced income and not assessable in Australia. The rental income you derive in Australia will be assessable at non-resident rates in Australia.