Private ruling: International - Residency
Date of advice: 6 March 2017
Published: August 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for tax purposes for the period XXX to YYY? | A1: Yes. | Q2: Is your foreign source income derived during this period assessable in Australia? | A2: Yes.

Relevant facts and circumstances: You are a citizen of Country A You have lived in Country A since 20XX. In the 20YY you accepted a job assignment in Australia. You travelled to Australia as a permanent resident under a visa. Your unit in Country A was rented out whilst in Australia and for the period XXX to YYY. You included the rental income from this property in your tax returns. On XXX you accepted another job assignment and moved back to Country A. You were no longer earning Australian sourced income. Your spouse and children stayed in Australia until YYY due to other commitments. You returned to Australia to help your family pack and finalise everything before permanently moving back to Country A. You work for the company which is a Country A resident company. You are a resident of Country A for tax purposes. You hold investments in Country A. You hold investments in Australia.

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

Reasons for decision: Summary: Based on the facts you ceased to be a resident of Australia on YYY. This is due to the fact that your spouse and children resided in Australia until this date meaning that you had significant connections to Australia during this time. The result of this is that you meet the resides test for the period XXX to YYY. | Detailed Reasoning - Detailed reasoning: 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. The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered. If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: 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'. Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are: ● whether the person is physically present in that country at some time during the year of income ● the history of the person's residence and movements ● if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits ● if the person is outside the country for part of the relevant income year, the purpose of the absences ● the family and business ties which the person has with the particular country, and ● whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there. Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. Presence within Australia You were physically present within Australia several days during the period XXX to YYY. History of residence and movements You lived outside of Australia from 20XX until 20YY when you returned to Australia. Frequency, regularity, duration and purpose of visits to Australian You have only visited Australia once since leaving the country and this was to help your family to prepare to move back to the Country A. Family and Business ties You had strong family ties in Australia with your spouse and children residing here from XXX to YYY. Your business ties from XXX lied within Country A. Place of Abode You had a place of abode available Australia for the period in question however due to your property in Country A being leased and not immediately available. Considering all of these factors whilst you were outside of Australia from XXX and your employment ties were not Australian you still had significant family ties within the country. The fact that you and your spouse had a predetermined plan for leaving Australia on XXX indicates that you were still keeping a connection with Australia and that this date was the date that you intended to end this connection. Therefore, you meet the requirements of the resides test. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the 'resides' test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument. | Detailed Reasoning - The domicile test: If a person's domicile is Australia they will be 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'. When you moved to Australia with your family under visa subclass 100 your domicile of choice became Australia. However, you are a citizen of the Country A and when you returned on YYY 20XX to live there indefinitely your domicile changed back to the Country A. Therefore, you will not be a resident under the domicile test. | Detailed Reasoning - The superannuation Test and the 183 day test: As you have met the requirements of the resides test and the domicile test there is no need to consider the 183 day test and superannuation test. | Detailed Reasoning - Your residency status: Accordingly for the period YYY to XXX you are a resident of Australia for income tax purposes as you meet at least one of the residency test requirements outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA1997. | Detailed Reasoning - Question 2: Even though you are a resident of Australia this does not necessarily mean you are taxed in Australia or that you are only taxed in Australia. There exists a double taxation agreement (DTA) between Australia and Country A, this DTA provides that you are taxable in Australia on your Country A income.