Private ruling: Residency and leaving Australia
Date of advice: 8 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes from when you departed Australia? | No


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1). | Income Tax Assessment Act 1997 Section 6-5.

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 (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 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 meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. In considering the definition of 'reside', the courts have stated that the word 'reside' should be given the widest meaning. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - (i) Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249): Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there 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 . You have been working in Country A since December 20XX on a full time contract. You have not returned to Australia since leaving in December 20XX. | Detailed Reasoning - (iii) History of residence and movements: You have lived in Australia until December 20XX on a permanent resident visa but you do not have Australian citizenship. You are originally from Country A and have returned there for work. | Detailed Reasoning - (iv) Habits and "mode of life": You have returned to Country A and commenced working there on a full time basis. You are renting in Country A and your family and friends are there. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country. You have not returned to Australia since you left in December 20XX. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: You have returned to Country A for work purposes. You have not returned to Australia since that time. | Detailed Reasoning - Family: You have no family living in Australia. Your family resides in Country A. | Detailed Reasoning - Business or economic ties: You have no business or economic ties in Australia. | Detailed Reasoning - Assets: You have a bank account and a superannuation fund in Australia. You have a bank account in Country A. | Detailed Reasoning - Maintenance of Place of abode in Australia: You do not own a property in Australia. You are renting accommodation in Country A. Your parents own their home and also have an apartment which you can live in at any time. | Summary: As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning. There are various factors outlined above which indicate that you will not be a resident of Australia for tax purposes. Specifically; • You will continue to work in Country A on an ongoing basis. • You do not intend to return to Australia to live in the foreseeable future • You have bank accounts in Australia. • You do not own property in Australia. • You have full time ongoing employment in Country A. • You have opened bank accounts in Country A and have strong social connections. Based on a consideration of all of the factors outlined above, you will not maintain a strong continuity of association with Australia while you are overseas. You do not intend to return to Australia to live in the foreseeable future. Therefore, you will not be residing in Australia in accordance with the ordinary meaning of the word. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. Your country of origin is Country A. Australia became your domicile of choice when you were granted permanent residency. You are a citizen of Country A and prior to you leaving Australia you had a permanent residency visa in Australia as you are returning to the country you are a citizen Country A will once again become your domicile of choice. You have stated that you will be living in Country A for the foreseeable future and have not expressed an intention to return to Australia. The Commissioner is satisfied you will be permanently living outside Australia. Consequently, you will not be a resident of Australia under the domicile 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 do not satisfy this test for the income years as you were not here for more than 183 days. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally this would include a permanent or temporary employee of the Australian Public Service (APS). As you are not nor have been a Commonwealth Government employee contributing to the PSS or CSS schemes, you are not considered to be a resident of Australia under the superannuation test. | Detailed Reasoning - Conclusion: Based on the facts you have provided, you will not satisfy any of the tests of residency for taxation purposes after your departure from Australia and you will not be a resident of Australia for taxation purposes after that date.

You left Australia in December 20XX. | You intend to stay and work in Country A for an undetermined period but at least for a few years. | You have no plans to return to Australia at this point. | You are currently renting accommodation in Country A, but your family owns property and you can live there anytime. | You were renting accommodation in Australia and did not have a permanent place to live. | You have an employment contact in Country A for full time work that extends to retirement age. | You pay tax in Country A on your salary and wage income. | Your connections in Australia are restricted to friends and colleagues. | Your connections in Country A extends to friends, family and colleagues. | You are not nor have been a member of the CSS or PSS superannuation scheme.