Private ruling: Residency status
Date of advice: 19 November 2015
Published: January 2016
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019
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 Country Z and are a citizen of Country Z. You moved to Australia and were granted permanent residency. Your Australian employment contract expired and was not renewed. Just prior your spouse was retrenched from their Australian employment. After being unsuccessful in seeking further employment in Australia you accepted an employment position in Country K. Shortly after you left Australia to live and work in Country K. You entered Country K on a residency permit card that is valid for a number of years and can be renewed. Your spouse and dependants will join you in Country K at the commencement of the new school term. Your dependants will attend school in Country K. Your eldest child is independent and will remain in Australia to continue tertiary education. While in Country K you live in a fully furnished home that you will have exclusive use of. Your assets in Australia consist of your home and bank accounts. You have a motor vehicle that you are in the process of disposing of. During your absence, your Australian home will be leased to your eldest child. You have ceased all social and sporting ties to Australia. Since your arrival you have established social and sporting ties in Country K. You have transferred your professional membership to an international membership. You have suspended your private health insurance and informed a number of Australian Government agencies and your superannuation fund that you will be departing Australia. You have informed the banks that you hold accounts with that you will no longer be residing in Australia and instructed them to withhold 10% non-resident withholding tax. Neither you nor your spouse, are an eligible employee in the CSS or a member of the PSS. You have no intention of returning to Australia in the future.

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

Reasons for decision: Detailed Reasoning - Residency: 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 (and permanent place of abode) test, • the 183 day test, and • the superannuation test. The first two tests are examined in detail in Taxation Ruling No. IT 2650 Income Tax: Residency - Permanent Place Of Abode Outside Australia . The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Significant in reaching this conclusion is that on arrival in Country K you and your family will establish a permanent place of abode outside of Australia. You will not be present in Australia for any period of significance and neither you nor your spouse had been employed by the Commonwealth Government of Australia. As you will not satisfy any of the tests for residency, you will not be a resident of Australia for income tax purposes from the date of your departure under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.