Private ruling: Residency
Date of advice: 18 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | No.

Relevant facts and circumstances: You are citizen of country A and country A is your country of origin. You and your family moved from country A to country B on #. You hold a residency permit which allows you to reside in the country Band is renewable every # years. You have held residency permits to reside in the country B since #. Your intention is to reside in the country B permanently. You are permanently employed in country B. You have never lived or worked in Australia and do not intend to. Your spouse and children departed country b on # to relocate to Australia. The reason for their relocation was so that your children could complete their education in Australia. You have made several short visits to Australia since # (5-7 time per year) to visit your spouse and children. You utilise your leave to make trips to Australia. You hold a visa which allows you to reside in Australia permanently. You applied for this visa so that you enter Australia without delay if required. In country B you own a flat and the title deed is in your name only. In country B you own motor vehicles, bank accounts and credit card and your personal effects are in your flat. You have a country B driver’s license. You have social and sporting ties in the country B. In Australia you and your spouse have joint ownership of a property. You do not have an Australian driver’s license and rely on your spouse and public transport when you visit. You do not intend living in Australia in the future. You financially support your family in Australia by sending a portion of it to the joint bank account held with your spouse in Australia. You have never been named on your spouse’s Medicare card and have never applied for Medicare benefits. You and your spouse are not eligible to contribute to the relevant Commonwealth super fund.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6(1) | 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 . 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 Australian 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 Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia 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. You and your family moved to country B on many years ago. You have permanent employment in country B. Your intention was and is to reside in country B permanently. Your spouse and children departed country B on # to relocate to Australia. The reason for their relocation was so that your children could complete their education in Australia. In country B you own a flat and the title deed is in your name only. In country B you own motor vehicles, bank accounts and a credit card and your personal effects are in your flat. In Australia you and your spouse have joint ownership of a property. You have made several short visits to Australia since # (5-7 time per year) to visit your spouse and children. You utilise your leave to make trips to Australia. You financially support your family in Australia by sending a portion of it to the joint bank account held with your spouse in Australia. You are/were not residing in Australia according to ordinary concepts due to your ongoing employment, living arrangements and intention to remain living and working overseas permanently. Although your family has returned to Australia you still remain a non-resident for tax purposes. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her 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. Your domicile of origin is Country A and your domicile of choice is Country B. You are not a resident under this 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 were not and do not intend to be in Australia for more than 183 days in any of the applicable financial years. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You and your spouse are not eligible to contribute to the relevant Commonwealth super fund. You are not a resident under this test. As you are not a resident under any of the four tests you are not a resident.