Private ruling: Residency – departing Australia
Date of advice: 17 July 2018
Published: September 2018
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020 | Year ended 30 June 2021
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you a non-resident of Australia for income taxation purposes from the day you departed Australia? | A1: No | Q2: Are you a non-resident of Australia for income taxation purposes from the day you take up residence in your employer provided accommodation in overseas country A? | A2: Yes

Relevant facts and circumstances: You are an Australian citizen. You were an Australian resident for tax purposes prior to your departure from Australia. You have accepted an employment contract based in overseas country A. Your employer is based in overseas country B. Your accommodation in overseas country A will be employer provided. The accommodation to be provided to you is a fully furnished house for your sole use rented under your employer’s name and will be your permanent home until the end of your employment contract. You will be a resident of overseas country A for tax purposes. You departed Australia for overseas country B as you were required to attend an orientation and induction programme. A letter from your employer states that you would be deployed directly to overseas country A from overseas country B between certain dates and that you will be required to return to overseas country B to attend a briefing programme a short time after that departure. Your visa for overseas country A is pending and it is expected to be issued shortly. You have applied for a special category visa that will be applicable for a period of time slightly longer than your employment contract. Your visa application was done through your employer based on your employment contract. You intend to stay in overseas country A after the end of your contract. You have advised that if you do not renew your contract at the end of your contract it is likely you will take another position in other nearby overseas countries. Upon being offered your employment contract you made the decision to live outside Australia indefinitely. You plan to visit your family in Australia for approximately two weeks per year. You do not have a spouse or any children. You only have extended family living in Australia. You have no assets or property in Australia. You do not intend to nor are required to financially support anyone in Australia. You have notified the electoral commission of your departure from Australia. You were not aware you needed to notify Medicare of your departure from Australia so have not done so. You have advised your private health insurer of your departure. Prior to your departure from Australia you were staying with a friend. You have maintained your Australian bank account. Your salary will be paid into overseas country A and B bank accounts. You have freighted most of your personal effects from Australia to overseas country A and you have a small amount stored in Australia. You will not receive income from Australian sources. You have advised your financial institution that you are a foreign resident. You will not maintain any professional, social or sporting connections with Australia. You hold a driver’s licence for overseas country A. You will gain a first aid qualification in overseas country B and possibly other qualifications that are identified in the course of your employment. You have never been employed by the Commonwealth of Australia. You are not a member of the Public Sector Superannuation Scheme or the Commonwealth Superannuation Scheme.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: 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 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. Based on the facts you have provided and for the reasons you have given, we can conclude that you will not satisfy any of the tests of residency from the date you take up your permanent place of abode in overseas country A. You were a resident of Australia prior to your departure from Australia and you will continue to be a resident of Australia until the day you commence your tenancy in the fully furnished employer provided house in overseas country A. Prior to this date we would consider that you do not pass the domicile test as you have not established a permanent place of abode outside of Australia. You therefore continue to be a resident of Australia until you move into your permanent place of abode in overseas country A and on this date you will become a non-resident. Accordingly you will not be a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 from the date you establish a permanent place of abode in overseas country A.