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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012556102860

Ruling

Subject: Residency

Question and answer:

Were you a resident of Australia for taxation purposes for the period you were in Country Y?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You were born in Australia and you are a citizen of Australia.

You went to Country Y for work purposes.

You entered Country Y on a work visa which was for a few years.

The work visa did not allow you to stay in Country Y on a permanent basis.

You are not a permanent resident of any other country.

You returned to Australia earlier than expected due to visa issues and commenced study in Australia (after X months).

You lived in employer arranged accommodation while you were in Country Y.

You took personal items to Country Y with you.

You lived with your parents in Australia prior to going to Country Y. Your parents did not accompany you to Country Y.

You have no social or sporting connections in Australia.

You joined a gym and some work specific groups in Country Y.

You have never been a Commonwealth Government employee.

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). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:

The first two tests are examined in detail in Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia (Taxation Ruling IT 2650).

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 an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

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:

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in Taxation Ruling TR 98/17 residency status of individuals who enter Australia and Taxation Ruling IT 2650. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

(i) Physical presence in Australia

A person does not necessarily cease to be a resident because he or she is physically absent from Australia.

In relation to this the AAT has stated that:

You left Australia and went to Country Y to work.

You entered Country Y on a work visa. This visa did not allow you to stay permanently in Country Y.

You returned to Australia earlier than expected due to visa issues.

(ii) Nationality

The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case.

You are an Australian Citizen.

(iii) History of residence

You were born in Australia and you are a citizen of Australia.

Prior to going to Country Y you lived with your parents in Australia.

(iv) Habits and "mode of life"

The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia.

You went to Country Y for work purposes.

You lived in employer arranged accommodation in Country Y.

You took your personal items to Country Y and joined a gym and work specific groups.

(v) Frequency, regularity and duration of visits to Australia.

Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country.

Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia.

You were in Country Y for X months.

You were required to leave Country Y due to issues with your work visa.

You have returned to Australia.

(vi) Purpose of visits to or absences from Australia

You were absent for a period of X months working in Country Y.

(vii) Family and business ties to Australia and the overseas country or countries

Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident.

Family

You were not accompanied by your parents to Country Y.

Business or economic ties

You have lived and worked in Australia up until you left for Country Y.

Assets

You have personal items which were with you in Country Y.

(viii) Maintenance of Place of abode

The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer.

You did not maintain a home in Australia for the period you were in Country Y.

Summary

As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

There are several factors outlined above which indicate that you have not ceased to be a resident of Australia. Specifically:

Based on a consideration of all of the factors outlined above you are a resident of Australia according to ordinary concepts as you maintained a continuity of association with Australia for the relevant period.

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'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

Your domicile of origin is Australia.

You are a citizen of Australia and not a permanent resident of any other country.

Your domicile is therefore Australia.

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.

The Commissioner is not satisfied that you have set up a permanent place of abode outside.

Australia for the following reasons:

You are a resident under this test.

Residency status

As you are a resident of Australia for taxation purposes under the resides and domicile tests it is not necessary to consider the 183 day and superannuation tests.

You were a resident of Australia for taxation purposes for the period you were working in Country Y.

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