Private ruling: Residency status
Published: December 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Questions and answers: | Are you a resident of Australia for income tax purposes? | Yes.

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 the country Z and are a citizen of country Z. You moved to Australia and resided in Australia as a permanent resident for an extended period. In addition to a country Z, you hold an Australian Return Visa Subclass 155. You accepted a full time employment position for an indefinite period with organisation R which is a company based in country W. Shortly after you left Australia to begin your overseas employment assignment. The reason that you included on your outgoing immigration card was that you were leaving permanently. Your partner and pet accompanied you to country W. You entered country W on a Permit to Work visa and your partner was considered your dependant. The visa allows you to stay in country W indefinitely dependant on your employment. Shortly after arriving in country W you accepted a fulltime position with organisation S. On arrival in country W, you and your partner; · found an apartment and signed an extended lease; · signed an extended phone and internet contract; and · you opened a bank account in country W intending this to be your account for the future. The apartment that you and your spouse leased in country W contained a bed, couch, table and inbuilt washer/oven. You were required to purchase or bring various items to furnish the apartment. Upon starting your employment with organisation S, you set up a country W Superfund. While in country W you gave instructions to your accountant to wind up your Australian business and family trust. During the years included in this ruling were out of the country for a period of greater than 183 days. Since departing Australia you have returned to Australia on a number of occasions. Some of the trips were for short periods for business purposes. Another trip was partly for business followed by a break where you travelled across Australia. Your assets in Australia consist of a number of properties, one of which is used as a rental property the other property for various reasons is unable to be rented out to tenants. You have maintained ownership of the properties as they were considered a good investment at the time. However, although you have spent time and money in renovations the value of the properties had not increased and had you disposed of them prior to your departure you would have made a loss. A portion of you remuneration that you receive from your employment in country W is transferred to Australia to service your mortgage on one of your properties. While in country W, you and your partner began paying off your Australian credit cards. Your spouse also closed their savings account. Your assets in country W consist of your household possessions. You have no social, sporting or family ties in Australia. Your spouse has siblings that live in Australia. You have various social and sporting ties in country W. You and your spouse celebrated your marriage in Country W. Your partner removed themself from the Australian electoral role. You and your spouse suspended your Australian private health insurance and cancelled your Australian PO Box. Prior to your departure you either disposed of or left for the convenience of your tenants all of your household effects. You were not required to advise the Australian Electoral Commission of your departure as you are not a citizen of Australia. Due to your employer's service requirements, your employment position with organisation S is required to be relocated from country W to Australia. Although you had intended to live in country W indefinitely, you are considering returning to Australia as the employment position that you hold is an interesting position and organisation S is an excellent company to be employed with.

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: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. 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 NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia . 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 a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests. | Detailed Reasoning - The resides test: In FC of T v Miller (1946) 73 CLR 93 at page 99-100 and Subrahmanyam v FC Of T [2002] AATA 1298; 2002 ATC 2303; ( 2002) 51 ATR 1173 at paragraph 43-44 , it was determined that the word ' resides' should be given the widest meaning. Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, identifies a number of factors which assist in determining the residency status of a taxpayer. Although Tax Ruling TR 98/17, discusses the Commissioners view on the residency status of individuals entering Australia, the same principles can be applied to determine whether individuals leaving Australia remained residents of Australia for income tax purposes. According to paragraph 20 of TR 98/17 factors to be considered in determining residency in Australia are: · · intention or purpose of presence; · ·family and business/employment ties; · ·maintenance and location of assets; and · ·social and living arrangements. Paragraph 21 of TR 98/17 further states that: No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances. Recent case law decisions have expanded on the list of factors identified in TR 98/17. Case 5/2013 and Sneddon v FC of T (Sneddons Case) , for example, considered the following factors in relation to whether the taxpayer resided in Australia: (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. Each of these factors will be considered in turn, with reference, where relevant, to recent Australian case law decisions in which the taxpayer was determined to be a resident of Australia in accordance with subsection 6(1). | Detailed Reasoning - Physical presence in Australia: A person does not necessarily cease to be a resident of a particular place just because he or she is physically absent. The test is whether the person has retained a continuity of association with the place , together with an intention to return to that place and an attitude that the place remains home ( Joachim v Federal Commissioner of Taxation 2002 ATC 2088, at 2090). In recent court cases taxpayers were found to be residents of Australia for income tax purposes even though they had only spent a minimal period in Australia. In Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 ( Iyengar's Case ), it was indicated that there is a requirement that you at least be physically present in Australia for part of an income year. Further in this case it was considered that the taxpayer remained a resident of Australia for income tax purposes even though during the period he was working overseas (2 years and 7 months) he had only returned to Australia for a two week period and for a 10 day period. In your case, you arrived in Australia and became a resident of Australia for income tax purposes. After a number of years you left Australia for an indefinite period, after accepting an employment position in country W. Since your departure you have return to Australia on a number of occasions for business and holiday purposes. While it is acknowledged that your presence in Australia was for brief periods and that they were for employment reasons in part, consistent with the principles established in the Iyengar's case , we consider that this presence will be sufficient to demonstrate that you are maintaining an ongoing continuity of association with Australia for the years included in this ruling. | Detailed Reasoning - Nationality: In Iyengar's Case , it was noted that in most cases, the nationality of a person would not be a factor to be taken into account along with other circumstances in determining where his or her residence is. However, in cases that could go either way, the citizenship of a person may not be completely irrelevant in the conclusion to be drawn from all the relevant facts In your case, you are a citizen of the county Z and resident of Australia for tax purposes. You also hold an Australian Subclass 155 visa. This visa allows the holder to stay indefinitely in Australia as a permanent resident. It also contains a travel facility that allows the holder travel to and from Australia for up to 5 years. With regards to your status in country W, you entered country W on a on a Permit to Work visa. From the information that you have provided your visa only allows you to remain in country Was long as you are employed and further you have not indicated that you have sought a more permanent residency status in country W. | Detailed Reasoning - History of residence and movements: In Iyengar's Case , the Tribunal noted that both past and subsequent history of a person's residence may be relevant in determining whether that person is ordinarily resident (for taxation purposes) in a country in a particular income year. Significant in Iyengar's Case is that when he fulfilled a long term overseas employment opportunity he would return to his home in Australia for a break before leaving Australia and taking on another overseas employment opportunity. In your circumstances, you were born in the country Z and moved to Australia. After a number of years you left Australia to commence an employment opportunity in Country W. You are now considering whether to return to Australia as you wish to continue your employment. While your circumstances differ from those in Iyengar's Case, what is consistent is that you left Australia for the purpose of pursuing an employment opportunity in country W and further you are considering returning to Australia to maintain your employment with your current employer. This adds significant weight to the conclusion that your current history of residence and movements are dependent on employment opportunities rather than a desire to leave Australia indefinitely. In light of the above and consistent with the principles established in Iyengar's Case , your history of residence and movements are not consistent with someone who is no longer residing in Australia. | Detailed Reasoning - (iv) Habits and "mode of life": In recent cases a taxpayer's habits and mode of life in the country where they are/had been living were considered when determining whether a taxpayer continued to be a residence of Australia for income tax purposes. On arrival in country W, you and your spouse rented an apartment and purchased or brought household items. In addition you have brought your pet dog with you to live in country W. With regards to social and sporting ties, in Iyengar's Case, the taxpayer stated he was a member of several overseas sporting and recreational associations in the overseas country where he employed. However the court held that these activities were considered normal pursuits for most normal expatriate persons who are employed abroad. Since your arrival in country W you have established a number of social and sporting. Consistent with the principles established in Iyengar's Case, these activities are normal pursuits for most normal expatriate persons who are employed abroad and therefore do not add any weight in determining your residency status for income tax purposes. In considering the above and based on the findings in Iyengar's Case , your habits and mode of life it is inconclusive whether your actions are consistent with someone who has ceased to be a resident of Australia for tax purposes | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: In Lysaght v Inland Revenue Commissioners (1928) 13 TC 511 ( Lysaght's Case ) the Court noted that mere fact that visits to a country are of short duration does not of itself exclude residence in that country. Further as previously discussed, when considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar's Case also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not of itself exclude an individual from being a resident in the country visited. Further, the taxpayer in Iyengar's Case had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months and was also considered to a resident of Australia for income tax purposes. In your case, since departing Australia you have returned to Australia on a number of occasions for both business and work purposes. It is acknowledged that there was a component business incorporated in your return trips to Australia however it should be noted that this time was spent in Australia. Considering the above and the principles established in Iyengar's Case and Lysaght's Case , we do not consider the frequency, regularity and relatively short duration of your visits to Australia is sufficient to preclude you from being considered a resident of Australia for taxation purposes post your departure from Australia. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: In Iyengar's Case, the evidence was that Mr Iyengar's intention was to go to Dubai (and later Doha) and work for Maersk for as long as it took to complete his contract and then to return to Australia, which he did. His motivation for doing so was to use the money he earned under the contract to pay down the mortgage on the Winthrop home as soon as possible. Such an intention (and motive) is indicative that Mr Iyengar was an Australian "resident" in the relevant period. In considering the purpose of your absence from Australia, you have stated that your absence from Australia was to live indefinitely in country W. However your actions are not consistent with this statement. You left Australia to begin employment in country W and have remained there for a period. However you are now considering returning to Australia due to your employment position being transferred to Australia. In light of the above, your actions demonstrate that your movements are dictated by employment opportunities and not by any desire that you may have to live indefinitely in country W. Further you are using your foreign sourced in come in part to pay down your Australian mortgage. Therefore, consistent with the principle established in Iyengar's Case, these actions are sufficient to preclude you from being considered a non-resident of Australia for taxation purposes in each of the income years included in this ruling. | Detailed Reasoning - (vii) Family, assets, business ties to Australia and the overseas country or countries: In Iyengar's Case , the court held that, despite the fact that Mr Iyengar spent almost 2 years and 7 months working in Dubai and later Doha for Maersk, his family ties with Australia were such that he remained a "resident of Australia" in the relevant years of income. That is, after moving to Australia from India in 1998 he and his family took the step of becoming Australian citizens 2003 and acquiring a home in about 2003. While he was overseas working on the Contract for Maersk, his wife, daughter and son remained in Australia (except for three short visits to Dubai by his wife), his most substantial asset (the Winthrop home) was located in Australia, he used almost all of the money he earned abroad to make accelerated payments on his Australian mortgage on the Winthrop home (which he acknowledged he considered to be the "family home") and he took his holidays (albeit short) in Australia at the Winthrop home with his family: Shand and Crockett. In applying the principles established in Iyengar's Case to your particular circumstance, it is acknowledged that that your family ties are stronger in country W due to your spouse accompanying you to country W. With regards to your assets, it is acknowledged that if you disposed of your Australian properties prior to your departure you would have made losses, however these properties have remained your most substantial assets. Further you are using your foreign sourced income to grow your asset wealth in Australia by paying off your mortgage. This is in contrast to country W where your major assets consist of your household furnishings. It is acknowledged that your family ties are stronger in country W. However your ties in terms of assets are far stronger in Australia than in country W. Therefore it is inconclusive whether your family, assets, business ties to Australia and to country W preclude you from being a resident of Australia for tax purposes. | Detailed Reasoning - Maintenance of Place of abode: In Iyengar's Case , the court held that another important factor in determining whether or not a person has ceased to be resident in a particular country is whether the person maintains a 'place of abode' in that country, whether owned by them or not, when they are absent from that country. In Australia, the maintenance of a home in a particular place has usually arisen in relation to the question whether the taxpayer had a "permanent place of abode" outside Australia within the meaning of the first statutory test (the domicile test) in section 6(1)(a)(i) of the ITAA 1936. In your case, prior to your departure from Australia you lived in your family home.. This property is now being used as a rental property. In contrast upon arrival in Singapore you and your spouse sign an extended lease on a self-provided, semi furnished apartment. You have taken out an extended internet contract and purchased or brought with you household items. In light of the above it is considered that you are maintaining a place of abode in Australia and therefore your actions are not consistent with someone who has ceased to be a resident of Australia for income tax purposes. | Detailed Reasoning - Conclusion: It is acknowledged that your spouse and pet dog has accompanied you to country W, you are living in self provided accommodation, you have a circle of friends and have engaged with several sporting and social clubs in country W. In addition you are not maintaining a place of abode in Australia. With regards to the remaining factors and the findings in recent case's including Sneddon's Case, Iyengar's Case and c ase 5/2013 , all of whom were found to be residents of Australia for income tax purposes the following are significant. You have returned to Australia on a number of occasions since your departure. You hold an Australian Subclass 155 visa that affords you almost all of the conditions enjoyed by Australian citizens particularly allowing you to remain in Australia with a status of a permanent resident in addition to permitting travel overseas and returning to Australia as a permanent resident. In contrast your country W Permit to Work visa allows you to stay in country W indefinitely under the provision that you remain employed. Your ties in terms of material assets are far more substantial in Australia than in country W, and you are continuing to service the growth of your Australian assets through transferring a portion of your overseas remuneration to Australia to service your mortgage. Significant is that although you have stated that you left Australia to live in country W indefinitely, your actions are such that they are dictated by employment opportunities, given that you moved to country W for employment purposes and now you are considering returning for work purposes. In consideration of all of the factors outlined above, it is concluded that you will continue to be a resident of Australia under the 'resides test' for income tax purposes during the income years that are included in this ruling. | Summary: As it has been established that you will continue to be a resident of Australia for income tax purposes under the resides test, there is no need to consider the remaining 3 tests. Therefore you will continue to be a resident of Australia for income tax purposes for the income years included in this ruling under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.