Private ruling: Residency
Date of advice: 26 October 2016
Published: February 2017
Ruling period: Year ended 30 June 20BB | Year ending 30 June 20CC | Year ending 30 June 20DD | Year ending 30 June 20EE | Year ending 30 June 20FF
Date scheme commenced: 1 July 20AA

Ruling: Q1: Are you an Australian resident for income tax purposes? | A1: Yes

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You work for a company, which is based in Country X You have an on-going employment contract. Your employment requires you to hold a resident visa and reside in Country X. You intend to stay in Country X indefinitely with no return date. You were granted a resident visa of Country X in 20AA. Based on your contract, your employer shall provide you and your family with economy air passage to the international airport nearest to the hometown of you once your employment contract terminates. You cannot stay in Country X permanently on your resident visa. You are required to re-apply for your resident visa every n years and have a full medical. Your resident visa becomes invalid if you leave the country for more than m months. There is a sponsor listed on your resident visa. Your employment requires you to travel between Country A, Country B, Country C, and Country X. You expect to spend a days in Country A, b days in Country B, and c days in Country C for work purposes. You rent a serviced apartment in Country X. The rental agreement is under your name. You have separated with your ex-spouse. Your Australian main residence remains in your ex-spouse's name. You have an Australian bank account. You will continue to use your Australian bank account for international purposes. You also have a bank account and a motor vehicle in Country X. You have a car licence and a medical card in Country X. You have X dependent children who are living with your ex-spouse in Australia. You also have X adult children from previous relationships. You financially support your dependent children and your ex-spouse. You will financially support your children until they finish their schooling. You will financially support your ex-spouse until they are able to secure employment. You pay your ex-spouse AU$xxx per month plus expenses. The expenses include schooling, incidentals, emergencies, and other normal living expenses within reason. Your ex-spouse can access your Australian bank account. You expect to spend no more than 40 to 60 days in Australia every year. The purpose of your visiting Australia would be to visit your children and your parents. You also expect to take holidays in overseas every year. You do not access the Medicare system in Australia. You are not a Commonwealth Government of Australia employee for superannuation purposes.


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 income 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. In your case, you are a citizen of Australia. You have an Australian bank account. You will continue to use your Australian bank account for international purposes. You have X dependent children who are living with your ex-spouse in Australia. You financially support your dependent children and your ex-spouse. You will financially support your children until they finish their schooling. You will financially support your ex-spouse until they is able to secure employment. You pay your ex-spouse AU$2xxx per month plus expenses. The expenses include schooling, incidentals, emergencies, and other normal living expenses within reasons. Your ex-spouse can access your Australian bank account. You expect to spend no more than 40 to 60 days in Australia every year. The purpose of your visiting Australia would be to visit your children and your parent. Although you intend to stay in Country X indefinitely, you have X dependent children who are living with your ex-spouse in Australia. Moreover, you will financially support your children until they finish their schooling, and you will financially support your ex-spouse until they is able to secure employment. Therefore, you haven't broken the connection with Australia. You are a resident of Australia under the resides test. | Detailed Reasoning - Your residency status: You will remain a resident of Australia for taxation purposes for the period you are working in Country X.

Relevant legislative provision: Income Tax Assessment Act 1997 Section 6-5