Private ruling: Residency status
Published: January 2015
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2012

Ruling: Question and Answer | Are you a resident of Australia for tax purposes? | No

Relevant facts and circumstances: Your country of origin is Australia and you are a citizen of Australia. You have a family consisting of a spouse and young children. You have not been granted permanent residency in any country. You departed Australia with your family in the 20YY income year. You resided with your family in Country A for some years and then moved to Country B with your family. You had a temporary visa in Country A which had to be renewed each year. You also have a temporary visa in Country B which needs to be renewed each year. Your visa for Country A did not allow you to stay permanently in Country A. Similarly, your visa for Country B does not allow you to stay in Country B permanently. The purpose of your overseas visit is your spouse's employment. Your spouse worked in Country A for some years and then immediately began employment in Country B. The contract expires in the 2016-17 income year. You do not have a position or job being held for you in Australia. Your residency intentions are to remain overseas for a few more years. It has always been your intention to return to Australia permanently live. You decided to make your home indefinitely outside Australia in 20XX when you and your spouse decided to look for employment opportunities overseas in 20X. You do not have a set plan to return to Australia permanently, but expect to do so in the next m years unless there is a need to return sooner due to your ageing parents. You may move to another country before returning to Australia. You return to Australia every 12-18 months for holidays to visit family and friends. You and your family are renting a house in Country B. Your assets overseas are a bank account in your spouse's name and household goods, including kitchenware, furniture, books and toys. You shipped your personal effects Country A and now have them in Country B. You do not have a permanent place to live in Australia. Your assets in Australia are a cheque and credit card account in your name, a savings and credit card account in your spouse's name, and a couple of investments. Your only social and sporting connections with Australia are being a supporter of a sporting team. Neither you nor your spouse is an eligible member of a relevant Commonwealth superannuation fund.

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

Reasons for decision: Summary: An Australian resident for taxation purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) ITAA 1997 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' are defined in subsection 6(1) of the ITAA 1936. The definition gives us a series of tests which assist in determining whether a person is a resident of Australia. These tests are: 1. residence according to ordinary concepts; 2. the domicile/permanent place of abode test; 3. the 183 day/usual place of abode test; or 4. the Commonwealth superannuation fund test. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where you do not reside in Australia according to ordinary concepts, you may still be a resident of Australia for tax purposes if you meet the conditions of any one of the other three tests. We refer to Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia which provides guidelines for determining whether individuals who leave Australia to live overseas cease to be Australian residents for income tax purposes during their overseas stay. | Detailed Reasoning - 1. Residency according to ordinary concepts test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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. The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In your case, you will not be residing in Australia for the purposes of the resides test for the following reasons: • You, your spouse and children have been living overseas since the 20YY income year. • You resided with your family in Country A for some years. You moved to Country B immediately for your spouse's employment purposes and will stay there until at least a date in the 2016-17 income year. • You decided to make your home indefinitely outside Australia in 20XX when you and your spouse decided to look for employment opportunities overseas in 20XX. • Whilst it has always been your intention to return to Australia permanently to live, your residency intentions are to remain overseas for a few more years. • You do not have a set plan to return to Australia permanently, but expect to do so in the next m years unless there is a need to return sooner due to your ageing parents. • You do not have a position or job being held for you in Australia. • Since going overseas, your purpose of visiting Australia has been to visit family and friends whom you see every 12-18 months. • You and your family are living in long term accommodation by renting a house in Country B. • Your assets overseas are a bank account in your name and household goods, including kitchenware, furniture, books and toys. You shipped your personal effects CountryA and now have them in Country B. • You do not have a permanent place to live in Australia. • Your assets in Australia are a cheque and credit card account in your name, a savings and credit card account in your spouse's name, and a couple of investments. • Your only social and sporting connections with Australia are being a supporter of a sporting team. In view of the above factors, you are not residing in Australia under the 'resides test'. | Detailed Reasoning - Other residency tests: Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the domicile and permanent place of abode test, the 183 day test and superannuation fund test. | Detailed Reasoning - 2. The domicile and permanent place of abode test: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. | Detailed Reasoning - Domicile: A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. Your domicile is Australia because your country of origin is Australia and you are an Australian citizen. Therefore you will be a resident of Australia unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | Detailed Reasoning - Permanent place of abode: The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's 'place of abode' is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be everlasting or forever. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. IT 2650 sets out a number of factors established by Court and Tribunal decisions which assist in determining a taxpayer's permanent place of abode; (i) the intended and actual length of the taxpayer's stay in the overseas country; (ii) whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time; (iii) whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia; (iv) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; (v) the duration and continuity of the taxpayer's presence in the overseas country; and (vi) durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. As with the factors under the resides test not one single factor is decisive and the weight given to each factor depends on individual circumstances. Paragraph 24 of IT 2650 instructs that the weight of each factor will vary with individual circumstances and no single factor is decisive. However, 'greater weight should be given to factors (c) the establishment of a home outside Australia, (e) the duration and continuity of the individual's presence in the overseas country and (f) the durability of association that the individual has with a particular place in Australia than to the remaining factors'. Weighing all the factors above in light of your individual circumstances, you have established a permanent place of abode outside Australia based on the following: • You departed Australia in the 20YY income year and are not sure when you will be returning to Australia on a permanent basis. • You decided to make your home indefinitely outside Australia in 20XX when you and your spouse decided to look for employment opportunities overseas in 20XX. • You do not have a set plan to return to Australia permanently, but expect to do so in the next m years unless there is a need to return sooner due to your ageing parents. You may move to another country before returning to Australia. • You have taken your family with you • You do not have substantial assets in Australia. • You are living in long term accommodation overseas. • You do not have a permanent home in Australia. • You have taken your personal effects with you. We have noted that you have only had temporary visas since being overseas. In addition, whilst you do visit your friends and family in Australia, and it is your intention to return sometime in the future, you have established a permanent place of abode outside Australia As the Commissioner is satisfied that you have a permanent place of abode outside Australia, you are not a resident of Australia for income tax purposes under this test. | Detailed Reasoning - 3. The 183-day test: Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that your usual place of abode is outside Australia and you have no intention to take up residence here. You have not been and do not intend to be present in Australia for more than 183 days continuously or intermittently. You return to Australia every 12-18 months to visit friends and family. Thus, you are not a resident under this test. | Detailed Reasoning - 4. The superannuation test: You will be a resident if you are eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or you are the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. Neither you nor your spouse has ever been eligible to contribute to the PSS or CSS. Therefore, this test does not apply to you. | Detailed Reasoning - Your residency status: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not an Australia resident for income tax purposes.