Private ruling: Residency
Date of advice: 10 November 2015
Published: January 2016
Ruling period: Year ending 30 June 2010 | Year ending 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2009

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes? | Yes. | 2. Is your overseas income assessable in Australia? | Yes.

Relevant facts and circumstances: Your country of origin is Australia. You are a citizen of Australia. You have not been granted permanent residency in any country. You ceased employment with your Australian employer. You left Australia to live and work in a foreign country. You entered a foreign country on work visas supplied by your employer. These visas do not grant you permanent residency status. Your residency intentions were to work overseas and reside in a foreign country. You have not changed employer since arriving in a foreign country. You have been working for the same employer for several years in a foreign country with opportunities to work in other. Your current contract can be extended. You have no job or position being held for you in Australia. Since moving to a foreign country, you have returned to Australia on several occasions by yourself. The purpose of these trips was to visit family and friends and personal matters. You do not have a spouse, partner or children. You do not have a place of residence in Australia. You live with your parents when you return to Australia. You do not have any stocks, shares or real property. You have a bank account in Australia from which you derive interest income while overseas. You have not advised any Australian financial institutions with that you are a foreign resident so that non-resident withholding tax can be deducted. You have most of your personal belongings with you in a foreign country. You have household and personal effects in Australia which have been left at your parents' home. You do not own and have not acquired any assets while overseas. You reside in a fully furnished unit within the employer's compound in a foreign country. Your employer provides all accommodation and meals; although you cook for yourself. You work according to a roster. When you are on your rostered days off, you spend this time in numerous countries overseas but also Australia. You will remain in a foreign country as long as you have a suitable position with your employer. You do not maintain any professional/occupational, social or sporting connections with Australia nor have you established any in overseas countries. Your employer pays all your medical bills in a foreign country. However, you maintain your Australian private health insurance cover. You did not inform the Australian Electoral Commission or Medicare of your departure. You are not an eligible member of the Commonwealth Superannuation Scheme (CSS) or the Public Service Superannuation Scheme (PSS). When completing incoming and outgoing passenger cards, you stated as your residency status as Australia and your postal address in Australia. You have not lodged Australian income tax returns while overseas. Nor have you lodged any foreign income tax returns while living overseas. You are more than 16 years of age.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(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 (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 Income Tax: Residency - permanent place of abode outside Australia (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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | 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. There are several factors outlined above which indicate that you have ceased to be a resident of Australia, specifically: • You left Australia live and work in a foreign country. • You entered a foreign country on work visas supplied by your employer. These visas did not grant you permanent residency status. • You have not changed employer since arriving in a foreign country. • You do not have a spouse, partner or children. • You do not have a place of residence in Australia. • When in Australia you stay with your parents. • You do not own any real property. • You have most of your personal belongings with you in a foreign country. • You reside in a fully furnished unit within the employer's compound in a foreign country. Your employer provides all accommodation and meals, although you cook for yourself. Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you have not maintained a continuity of association with Australia for the income years of the ruling. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Domicile A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. As you are still an Australian citizen while living in a foreign country, your domicile is Australia and remains unchanged. Permanent place of abode 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. In your case, you reside in a fully furnished unit within the employer's compound in a foreign country. Your employer provides all accommodation and meals; although you cook for yourself. Also, your employer supplies you with your visas, which do grant you permanent residency status. The taxpayers in Boer v. Federal Commissioner of Taxation [2012] AATA 574; 2012 ATC 10-269 ( Boer's case ) lived in employer provided accommodation overseas which was not indicative of them establishing or maintaining their 'own' accommodation. This aspect was a contributing factor to them being unable to establish that they had a 'permanent place of abode' overseas. In your case, live in employer provided accommodation in a foreign country and your continuing presence there is dependent on your employment and your employer provided work visas. Should your employment cease for any reason, you will be required to leave the country. Although it is your intention to live and work in a foreign country on an ongoing basis, the duration and continuity of your presence is contingent on your continued employment in a foreign country. This makes your presence in a foreign country temporary in nature. You have not established a permanent place of abode in a foreign country as your presence in a foreign country is temporary in nature. You cannot establish a permanent place of abode when your presence in a place is temporary. The Commissioner is not satisfied you have a permanent place of abode outside of Australia. Therefore, you are considered to be a resident of Australia under the 'domicile and permanent place of abode' test of residency while you are living and working overseas. As you have passed the domicile and permanent place of abode test of residency, it is not necessary to consider the 183-day and superannuation tests. | Detailed Reasoning - Your residency status: As you are a resident of Australia under one of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes. | Detailed Reasoning - Assessable income: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident for tax purposes includes ordinary income derived directly or indirectly from all sources during the income year. Salary and wages are ordinary income. In your case, you are an Australian resident for tax purposes who receives salary/wage income for a foreign country during the year of the ruling. Therefore, the income you receive from a foreign country is included in your assessable income in Australia under section 6-5 of the ITAA 1997.