Private ruling: Residency
Date of advice: 17 February 2017
Published: July 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: Yes.

Relevant facts and circumstances: You were born in Country Y. You are a citizen of Country X. You accepted a work contract in in the 2015 income year in Country Z. The contract was initially for 12 months but was ended in in the 2016 income year. You rented accommodation in Country Z and furnished it with your belongings. After the contract ended in Country Z you were going to be sent elsewhere for work but this also fell through. You returned to Australia for a short period while you secured new employment in Country X. You commenced your employment in Country X in the 2016 income year. You have purchased a property in Country X. Your spouse intended on joining you overseas both in Country Z and Country X but due to health issues has been unable to leave Australia. Your spouse remained in your home in Australia for the period you were working in Country Z and continues to live there now you have moved to country X. You financially support your spouse. Your spouse intends on moving to Country X with you once they is able to do so. Neither you nor your spouse are currently or have ever been Commonwealth government employees.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 6(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 IT 2650 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 were working in Country Z from XXXX 2015 to XXXX 2016. You commenced work in Country X in XXX 2016. Your spouse has remained in Australia due to health issues and will join you in Country X when they are able to. Based on the facts above you were residing in Australia according to ordinary concepts for the 2016 financial year as you did not break your connection with Australia. In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period. In your case you went to Country Z and country X for work purposes. Your spouse remained in Australia. Your connection with Australia has not been broken because you are working overseas and have made short trips back to Australia to visit family. Your connection remains strong with Australia due to the fact that your family remain in Australia. In your case you choose to work outside Australia in Country Z and country X which is your reason for being overseas and you therefore remain a resident of Australia for taxation purposes. | Detailed Reasoning - Your residency status: You were a resident of Australia for taxation purposes for the 2016 income year. As a resident of Australia for taxation purposes you are required to declare all your income both in Australia and outside Australia. Your foreign sourced income is assessable in Australia and is required to be declared in your Australian tax returns.