Private ruling: Your Residency
Date of advice: 18 June 2018
Published: August 2018
Ruling period: Year Ending 30 June 20xx | Year Ending 30 June 20xx | Year Ending 30 June 20xx
Date scheme commenced: Year starting 1 July 20xx

Ruling: Q1: Are you a non-resident for tax purposes from late in the 201x/1x financial year until early in the 201x/1x financial year? | A1: Yes

Relevant facts and circumstances: You first moved to Australia in 20xx. You are a dual citizen of Australia and Country A. You are single with no dependants and have no family in Australia. Your parents are in Country A. You left Australia late in the 201x/1x financial year for employment in Country X. Your employer withholds tax and pays it to the Country X revenue authority. You have made several trips to Australia since leaving for Country X. The purpose of the first trip early in the 201x/1x financial year was to collect personal belongings to take back to Country X. You did not plan on living in Australia in the foreseeable future. The purpose of your trip in mid-201x/1x financial year was for a holiday. You stayed in a hotel. While on this trip you chose to purchase a property in Australia that you could stay at when your employment contract ended. The property was purchased in mid-201x/1x financial year. The contract exchanged after you returned to Country X. You have purchased this property so that you could have a home to return to when your contract finished. Initially you had no intention to reside in the property. You thought that you would rent out the property until you returned from Country X. The purpose of your trip early in the 201x/1x financial year was to inspect the property you had purchased in Australia. You connected utilities and bought a bed and television for the property. You had no personal possessions at the property. You chose not to rent the property at that stage. You keep your essential personal items with you in Country X. You leave these in Country X when you visit family in Country A or friends in Australia. The purpose of your trip in mid-201x/1x financial year was to furnish your property in Australia. You still had not decided if you were going to let the property or treat it as your home to return to when on leave from your employment. You had a consultation with your lawyers about residency requirements and decided not to let the unit and to keep the property to live in when you return to Australia. You have a room available to you in Country A at your parents’ home which is where you keep your personal possessions. After late in the 201x/1x financial year you were in Country A for the following periods: ● Early in the 201x/1x financial year ● Late in the 201x/1x financial year ● Early in the 201x/1x financial year ● Mid of the 201x/1x financial year Although early in the 201x/1x financial year and early in the 201x/1x financial year you travelled to Country Y During your visit to Country Y in xx/20xx, you travelled to Country AB for a few days in xx/20xx. When working offshore you stay aboard the oil platform in the living quarters. While onshore in Country X your employer provides accommodation. From late in the 201x/1x financial year to early in the 201x/1x financial year you stayed in a hotel in Country X on a full time basis as the oil rig was still being completed. When the oil rig was completed you began staying on the rig during your working shifts. While on the rig your personal possessions were stored at the hotel and the room was available to others. Your work cycles were/are : Late in the 201x/1x financial year to early in the 201x/1x financial year: Commissioning phase of the rig in the shipyard was 56 days on /14 off. Early in the 201x/1x financial year onwards: Platform moved to fixed location at sea with rotation changed to 28 days on / 28 days off. You have bank accounts in Australia, Country A and Country X. Your wages are paid directly into your Australian bank account. The Country X bank account is active but contains no funds. You derive nominal bank interest from your Australian and Country A bank accounts. You hold both an Australian and Country A driver’s license. You still hold a valid Medicare card which you haven’t used since late in the 201x/1x financial year. Your removed yourself from the electoral roll.

Relevant legislative provisions: Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Detailed Reasoning - Residency: 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 contains four tests which will help ascertain whether an individual is a resident of Australia for income tax purposes. These tests are: (i) the residence according to ordinary concepts test; (ii) the domicile/permanent place of abode test; (iii) the 183 days/usual place of abode test; and (iv) the Commonwealth superannuation test. An individual needs only fall within one of these categories to be a resident of Australia and must fall outside all four to be a non-resident. The main test for deciding a person’s residency status is whether they reside in Australia according to the ordinary meaning of the word resides. | Detailed Reasoning - (i) The residence according to ordinary concepts test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd edition , 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'. | Detailed Reasoning - (ii) The domicile/permanent place of abode test: There are essentially three types of domicile - domicile of origin, domicile of choice and domicile of dependency. Basically, the domicile of origin of an individual is where they were born. For example, if an individual is born in Australia, their domicile of origin is Australia. The domicile of choice is the country that an individual decides to make their home indefinitely. For example, applying for citizenship of another country would demonstrate a domicile of choice. A domicile of dependency normally only exists for minors or individuals who are of unsound mind. | Detailed Reasoning - Permanent place of abode: Even if an Australian domicile is established, the individual will not be a resident of Australia for tax purposes if their permanent place of abode is outside Australia. The Commissioner looks to Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia in determining an individual's permanent place of abode. The Ruling says that the following factors need to be taken into account: ● the intended and actual length of the individual's stay overseas; ● the continuity of the individual's stay overseas; ● whether the individual intends to return to Australia at some definite point of time; ● whether the individual has established a home overseas; and ● whether any residence exists in Australia or has been abandoned. | Detailed Reasoning - The intended and actual length of the individual's stay overseas: As a rule of thumb, an absence from Australia of two years or more is indicative of non-resident status. You left Australia late in the 201x/1x financial year to start employment in Country X. Your contract is for AA years. At that time you had no definite intentions of returning to Australia. | Detailed Reasoning - The continuity of the individual's stay overseas: You have spent the majority of the 201x/1x and 201x/1x financial years in Country X. This is for work purposes and you stayed either on the oil rig or in employer provided temporary accommodation which was only available while you were not on the oil rig. You have travelled to Country A to visit your parents. You have travelled numerous times to Country A for short holidays. | Detailed Reasoning - Whether the individual intends to return to Australia at some definite point of time: When you first departed you had no definite intentions of returning to Australia. You made several trips back to Australia and during one of these visits you chose to buy a property. Your lawyer advised “His initial intentions in purchasing the property was so that he could have a home to return to in Australia when he finished working in Country X”. You acquired your property in Australia mid-201x/1x financial year with the intent of staying there when your contract ended. This would indicate an intention to return to Australia at a particular point in time. Paragraph 27 of Taxation Ruling TR 98/17: residency status of individuals entering Australia states : 27. On entering this country, individuals may demonstrate they do not intend to reside in Australia, e.g., they may be visitors on holiday. When a change in their behaviour indicates an intention to reside here, e.g., they decide to migrate here, they are regarded as residents from the time their behaviour that is consistent with residing here commences. Intention is to be determined objectively, having regard to all relevant facts and circumstances Paragraph 27 of IT 2560 states: 27. Generally speaking, a taxpayer who leaves Australia with an intention of returning to Australia at the end of a transitory stay overseas would remain a resident of Australia for income tax purposes unless he or she can satisfy the Commissioner that a consideration of the other factors listed in paragraph 23 requires the conclusion that during the year of income his or her permanent place of abode was outside Australia. What constitutes a mere transitory stay overseas for these purposes would vary with the circumstances of each case. However, as a general proposition, an overseas stay for duration of less than 2 years would be considered as being of a transitory nature. It is stressed that the duration of the taxpayer's stay overseas is not of itself conclusive and must be considered with all the other factors listed in paragraph 23. | Detailed Reasoning - Whether the individual has established a home overseas: The courts have determined the expression ‘place of abode’ refers to a person's residence, where one lives with one's family and sleeps 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. You have not indicated that you own any property outside of Australia. You do stay at your parents’ property in Country A. You spent 28 days there in the 201x/1x financial year and 48 days in the 201x/1x financial year. The place you stay at in Country X is provided and/or paid for by your employer. You stay in a hotel and on the oil rig, neither of these are permanent places of abode. You keep your essential personal items with you in Country X. You leave these in Country X when you visit family in Country A or friends in Australia. Your employer provides your accommodation for you in Country X. Early in the 201x/1x financial year the accommodation was not kept exclusively for your use and is offered to other clients when you are on the oil rig or overseas. | Detailed Reasoning - Whether any residence exists in Australia or has been abandoned.: You lived in Australia from 20xx to 201x. You left late in the 201x/1x financial year taking your personal possessions to Country A to your parents’ home while you worked there. You have maintained friendships in Australia and return to see friends when you’re not working. You own a property in Australia that you purchased in mid-201x/1x financial year and have never rented and have indicated that you plan to live in the property at the end of your contract in Country X. To date you have only stayed in the property occasionally. You are a resident of Australia under the domicile/permanent place of abode test because you have a domicile of choice in Australia as evidenced by living in Australia from 20xx to 201x and your Australian citizenship. Your visits to Country A do not show any intention to remain permanently in Country A during your period of absence from Australia so your domicile has not reverted to Country A. As your domicile is Australia and the questions becomes have you a permanent place of abode overseas. The Commissioner accepts that until early in the 201x/1x financial year you did have a permanent place of abode as you lived in the long stay accommodations, with your personal effects, and you could treat the accommodation as you own home for that period. So for that period you were a non-resident of Australia. However after early in the 201x/1x financial year you only have temporary accommodation in Country X as you lived either on the oil rig or in temporary accommodation at the same hotel. The difference being the accommodation was used by others in your absence on the oil rig and your possessions were stored elsewhere at the hotel, therefore you are a resident of Australia for the period after early in the 201x/1x financial year.