Private ruling: Residence
Published: February 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

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

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You were born in Australia. You are a citizen of Australia. You obtain permanent residency of Country Y a number of years ago. You are a resident of Country Y for taxation purposes. You and your spouse went to Country Y a number of years ago. Your spouse is a national of Country Y. You do not intend on living permanently in Australia. You intend to live between Country Y and Australia. You and your spouse have a home in Country Y which you own 50-50. You have a business in Country Y which you are the owner and self-employed. As part of your business you had a start-up opportunity which saw you open 2 independent businesses in Country Y. You intend on selling these business's in the coming months. Your company owns 50% in another company. You intend to wind down your work load and will not take on any new clients. You and your spouse purchased a property in Australia with money you inherited from your parent's estate. This home will remain available to you when you are in Country Y. You will be receiving an Australian share portfolio in the coming months once probate has been granted on your parent's estate. You will not exceed 183 days in Australia in the 20XX income year. You have children living in Country Y. You have children and grandchildren living in Australia. Neither you nor your spouse are currently or ever been a Commonwealth government employee.

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 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • resides test • domicile and permanent place of abode test • 183 day test and • Commonwealth superannuation fund test. The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and "mode of life" (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) Maintenance of place of abode. These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. You and your family have lived in Country Y for a number of years. You have permanent residency of Country Y. You and your spouse have a home in Country Y. You have significant assets in Country Y. You work in Country Y. You have returned to Australia for visits in the 20XX income year and have not been here for 183 days. You have a property in Australia which you purchased to use when you come to Australia on visits. Based on the facts above you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. 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. Your domicile of origin is Australia and your domicile of choice is Country Y as you obtained permanent residency and have resided there for a number of years. In any event, the Commissioner is satisfied that you have a permanent place of abode in Country Y for the following reasons: • You have permanent residency of Country Y • You have been living and working in Country Y for a number of years • You have a home in Country Y • You have significant assets in Country Y Therefore you are not a resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days 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. You were not in Australia for more than 183 days in the 20XX income year. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You and your spouse have never been a commonwealth government employee. You are not a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes for the 20XX income year.