Private ruling: Residency
Published: September 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes prior to you returning to Australia | No | Are you a resident of Australia for taxation purposes since you returned to Australia? | Yes


Relevant legislative provisions: Income Tax Assessment Act 1936 6(1). | Income Tax Assessment Act 1997 Section 6-5. Section 18 of the Income Tax Rates Act 1986 .

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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. These tests are: · The resides test · The domicile test · The 183 day test · The superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650. 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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. Your residency status prior to you returning to Australia | Detailed Reasoning - The resides test: As you resided in Place A and Place B for two years, you are not considered to be residing in Australia under this test. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. 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 their 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. In your case, your association with Place A and Place B is considered more significant than with Australia for the following reasons; · you were working in Place A and Place B for two years · your family accompanied you overseas. · you had a house in both Place A and Place B. Based on these facts, it is considered that you established a permanent place of abode in the foreign countries for the period you were overseas. | Detailed Reasoning - The 183-day test: This test does not apply to you as you were not in Australia during this period. | Detailed Reasoning - The superannuation test: An individual is still considered to be an Australian resident for tax purposes if that person is eligible to contribute to a Commonwealth superannuation scheme such as the PSS or the CSS, or that person is the spouse or child under 16 of such a person. This test does not apply to you as you and your spouse are not eligible to contribute to the PSS or the CSS. | Detailed Reasoning - Your residency status: In your case, you are not considered to be an Australian resident for tax purposes under any of the tests or residency outlined in subsection 6(1) of the ITAA 1936. Accordingly, you are deemed to be a foreign resident from the date of your departure from Australia. Residency status upon your return to Australia | Detailed Reasoning - The resides test: In your case, you returned to live and work with your family in Australia. As you are living in Australia you are considered to be residing in Australia according to ordinary concepts. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes for the period from your return to Australia.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | You are a citizen of Australia. | You were born in Australia. | You lived in Place A for X months. You then moved to Place B for Y months | You left Australia on a three year visa for place A | You left Australia on an intercompany transfer. | You had a contract with the company. It was an indefinite contract. | The headquarters of the company in place A closed. | You transferred to Place B where you set up your own consultancy business representing the company as it did not have a presence in Place B. | You moved to Place B because your spouse was originally from there and so you could be closer to their family. | You were living in a house in Place A and again in Place B. | It was your intention to reside in Place A for three years | You came back to Australia for a short holiday. | You have bank account in Place A and Place B. | You have a bank account in Australia. | You have rental accommodation in Australia. | You paid tax on your salary and wage income in Place A and on your consultancy income in Place B. | Your family accompanied you when you went overseas. | You returned to Australia at the end of your time in Place B. | You are not nor have been a Commonwealth government employee.