Private ruling: Residency for taxation purposes
Date of advice: 13 October 2015
Published: October 2015
Ruling period: 1 July 20XX to 30 June 20YY.
Date scheme commenced: 1 July 20XX.

Ruling: Question and answer: | Were you a resident of Australia for taxation purposes during the financial year 1 July 20XX to 30 June 20YY? | No.

Relevant facts and circumstances: You were born in country A and are a citizen of country A. You have never lived in any country other than country A. You were granted a permanent residence visa for Australia. You will not renew that visa when it lapses. You have a home in country A where you have lived for many years. You intend to continue living in this home. You are married with adult children. Some of your children reside in country A with their families. Your spouse and your other children have been living in Australia for several years. Your spouse has a home in Australia. You have never lived in Australia and do not intend to commence residing in Australia. Your business interests in country A are significant. You have limited business interests in Australia. You visit Australia regularly for short periods of time, but always for less than 183 days in any financial year. In the financial year ended 30 June 20YY you spent less than 10 days in Australia. When you visit Australia you usually stay with your spouse in their home. You have no significant personal possessions in Australia. You maintain a bank account in Australia to meet your expenses when you visit Australia. You have no other assets in Australia. The Commonwealth superannuation test does not apply to you.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: Section 995-1 of the Income tax Assessment Act 1997 (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 it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Your spouse and some of your children have been residing in Australia for several years and when you visit Australia you usually reside with your spouse in their Australian home. Whilst it can be said that you are living in your spouse's home when you are in Australia, it cannot be said that you dwell there on any basis that could be described as permanent or considerable. This position is supported by the fact that in the past several financial years you have spent a significantly greater number of days outside Australia than you have in Australia. And, in the financial year ended 30 June 20YY (the year that is the subject of this ruling) you were in Australia for less than 100 days. In addition, although your spouse and some of your adult children have been residing in Australia for several years, you have remained living in your home in country A and have stated this is where you intend to continue living. This supports a conclusion that your home in country A is your 'settled or usual abode'. Considering the above, it cannot be said that you were a resident of Australia for taxation purposes under the resides test for the period 1 July 20XX to 30 June 20YY. | Detailed Reasoning - The domicile test: Under this test, a person with an Australian domicile 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. Your domicile of origin is country A and although you obtained an Australian permanent residence visa (your visa), it cannot be said the granting of your visa resulted in you obtaining a domicile by choice in Australia. Not only did you never live permanently in Australia prior to the granting of your visa, you have stated you have no intention of commencing to reside in Australia and that it is your intention to let your visa lapse when it expires. Considering the above, it must be concluded that you did not have an Australian domicile during the period 1 July 20XX to 30 June 20YY and you cannot have been a resident of Australia for taxation purposes under this test during that period. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied 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 in Australia for more than 183 days in the period 1 July 20XX to 30 June 20YY. Accordingly, this test will not operate to make you a resident of Australia during that period. | Detailed Reasoning - The superannuation test: The Commonwealth superannuation test does not apply to you. | Detailed Reasoning - Conclusion - your residency status: Based on the facts you have provided you were not be resident of Australia for taxation purposes for the period 1 July 20XX to 30 June 20YY.