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Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes for the period from when you arrived in Australia to the end of the income year 1?

Yes.

Are you a resident of Australia for tax purposes for the period from the beginning of income year 2 to when your family left Australia?

Yes.

Are you a resident of Australia for tax purposes in the income year 3?

No.

Are you a resident of Australia for tax purposes in the income year 4?

No.

This ruling applies for the following periods

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commenced on

1 xxx 2009

Relevant facts

Australia is your country of origin and you are a dual Australian/country A citizen.

You moved to the country A several years ago.

Your spouse was born in country A, is a country A citizen and has a permanent resident visa in Australia.

You initially resided in region A. You resided in state B with your spouse and children.

You own a family home jointly with your spouse in region B.

In income year 1 you moved to Australia with your spouse and children.

You moved to Australia with the intention of residing here and raising your children in a child friendly environment.

You did not sell your family home in region B when you moved to Australia in case the move did not go as planned or you were unable to find work or successfully commence a business.

In income year 1 you and your spouse purchased a unit in Australia.

In income year 2 you and your spouse started a business but found it difficult to find investors.

In income year 2 you received investment funding from investors in the country A and found that you had to move back to country A to enable the continued development of your business.

You returned to country A and lived with a relative in region A initially (as this was where business operations were set up) then bought a family home there in income year 4. You undertook renovations on your relative's property to accommodate your family.

Number of days spent in Australia in the financial year ending:

· Income year 1 less than 183

· Income year 2 more than 183

· Income year 3 less than 183

· Income year 4 less than 183

You do not intend returning to Australia to live permanently.

You and your spouse have never been Commonwealth Government of Australia employees.

You are over 16 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision

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 (ITAA 1936) and sub section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:

· the resides test

· the domicile test

· the 183 day test

· the superannuation 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. 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.

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'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. An individuals behaviour over the time spent in Australia must reflect a degree of continuity, routine or habit that is consistent with residing here. 

You:

· arrived in Australia in income year 1

· were accompanied by your spouse and children

· moved from country A with the intention to reside in Australia permanently and raise your children here

· lived in a unit in Australia that you and your spouse purchased

· left Australia on several different occasions during your stay for a period of time totalling xx days,

· started a business with your spouse in Australia in income year 2,

· returned to country A to live permanently in income year 2; your spouse and children returned in income year 2,

· did not return to your home in region B,

· lived with a relative in region A (so that you were in close proximity to your business) after you paid for renovations to accommodate your family until you purchased a home there in income year 4.

Based on this information, it is considered you were residing in Australia from when you arrived in Australia up until the date your spouse and children departed in income year 2. Your spouse, children and house were in one location which suggests that is the location of your home (that is: this is where you are residing). You were living in a unit with your family that you and your spouse purchased in income year 1, you and your spouse started a business in Australia in income year 2, and you intended living in Australia on a permanent basis. These facts suggest a degree of routine, regularity or habit that is consistent with residing here.

For the income year 1 you were a resident of Australia for tax purposes under the resides test from when you arrived in Australia.

For the income year 2 you were a resident of Australia for tax purposes under the resides test until your spouse and children left Australia.

For the remainder of the income year 2 and the income year 3 you were not a resident of Australia for tax purposes under the resides test as you and your family had returned to country A with the intention to reside there permanently. You were living in the one place on which you had undertaken renovations to accommodate your family and had started a business.

For the income year 4 you were not a resident of Australia for tax purposes under the resides test as you and your family had returned to country A with the intention to reside there permanently and had purchased a family home near your new business.

We do not need to consider the other tests for the income year 1 and the majority of the income year 2 as you have passed the 'resides test' for these periods.

The domicile test

If a person is considered to have their domicile in Australia they will be considered 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'. 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 show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country, such as by adopting citizenship or applying for permanent residency in that country.

You are an Australian citizen and a country A citizen. As you have dual citizenship, it may be argued that your domicile could be either in Australia or country A. However, as you and your family have settled in country A (always owning a property in country A), and you have established your business there, it is considered that your domicile after you left Australia in income year 2 is in country A.

The Commissioner is satisfied you are not a resident under this test from when your family left Australia in income year 2 (that is the remainder of the income year after your family left Australia) and the income years 3 and 4.

The 183-day test

Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, that is 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia.

In the income year 2 you were in Australia for greater than 183 days. However, the Commissioner is satisfied that after your family left Australia your usual place of abode was outside Australia and that you did not intend to take up residence in Australia from that time.

You are not a resident under this test from when your family left Australia in income year 2.

As you were not in Australia for over 183 days in the income years 3 and 4 this test is not satisfied for those income years.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. 

You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

Your residency status

For the income year 1 you were a resident of Australia for tax purposes under the resides test from the date of your arrival in Australia.

For the income year 2 you were a resident of Australia for tax purposes under the resides test until the date of your family's departure from Australia.

For the income year 3 you were not a resident of Australia for tax purposes under the resides test, the domicile test, the 183 day test, or the superannuation test.

For the income year 4 you were not a resident of Australia for tax purposes under the resides test, the domicile test, the 183 day test, or the superannuation test.

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