Private ruling: Regarding your residency status
Date of advice: 25 October 2017
Published: February 2017
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: You were born in Country T. You are a citizen of both Australia and Country T. You have a spouse and dependants. Your dependants were born in Australia. You moved to Country Y for a short period, before relocating to Country Z where you lived and worked. After a number of years, you and your spouse moved to Australia. After arriving in Australia you and your spouse became Australian citizens. On arrival in Australia both you and your spouse secured long term employment and long term rental accommodation. Your spouse gave birth to both your dependants whilst in Australia. You had intended to purchase a property in Australia; however due to you having a debt on a property in Country T you were unable to arrange any further debt. After a number of years, both you and your spouse were made redundant. Due to a slow-down in the industry both you and your spouse were unable to find further employment in Australia. With no short term employment prospects in Australia, you, your spouse and dependants departed Australia. After departing Australia, you lived with family in Country T before relocating to Country Y. While in Country Y you secured a full time short term employment contract. Your Country Y employment package included relocation costs that allowed you to relocate most of your belongings (furniture, car etc.) from Australia to Country Y. You left some furniture with your spouse's extended family in Australia. Your assets in Australia consists of bank accounts You have since rented a property in Country Y and are living and working there until the Australian job market improves. You are registered with numerous recruitment agencies in Australia and are hoping to return in the short term. You are a member a professional organisation. Prior to leaving Australia you updated the electoral role confirming you were leaving for a short period of time. You and your spouse have never been employees of the Commonwealth Government of Australia. Your intention is to return to Australia as soon as you can secure employment.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 995-1

Reasons for decision: Summary: Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes as 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. The tests are: ● the resides test, ● the domicile (and permanent place of abode) test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. | 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'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. 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'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. The totality of the taxpayer's factual circumstances needs to be taken into account in arriving at a decision. You have left Australia to live and work in Country Y for a short period and have been accompanied by your family. During this period you will not be physically be in Australia, therefore you will not be residing in Australia accordingly to the ordinary meaning of the word 'reside'. Based on the facts above you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case you were born in Country T, therefore your domicile of origin is Country T. You later moved to Australia and later became an Australian citizen; consequently Australia became your domicile of choice. Although you have left Australia to live and work in the Country Y for a short period of time, from the information that you have provided you have not made any attempt to gain a more permanent residency status in the Country Y, therefore your Australian domicile remains unchanged. Permanent place of abode The Commissioner's view on what constitutes a permanent place of abode is contained in Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia. From the information that you have provided, the project that you are employed on in Country Y is only for a short period and you are intending to return to Australia once you able to secure employment. The Commissioner does not consider the term of your Country Y employment or your intention to return to Australia once you have found Australian employment is consistent with someone who has established a permanent place of abode outside of Australia. Therefore, as you have an Australian domicile and the Commissioner is not satisfied that you have established a permanent place of abode outside of Australia you will remain a resident of Australia for income tax purposes under the domicile test. | Detailed Reasoning - Your residency status: As you are a resident of Australia under the domicile test outlined under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you will continue to be an Australian resident for taxation purposes for the period that you are living and working in Country Y.