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This edited version has been archived due to the length of time since original publication.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: 1012558501325

Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for taxation purposes for the period you are in Country Y?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

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

You are not a permanent resident of any other country.

You left Australia to go to country Y for work purposes.

You went to country Y on a youth mobility scheme visa.

This visa does not allow you to stay permanently in country Y.

You intend to be in country Y for the term of your visa of a couple of years.

Your spouse accompanied you to country Y.

You intend at this stage to return to Australia at the end of your visa.

You and your spouse rent a property in country Y.

You have a bank account in country Y and have purchased some household effects.

You have a bank account, car and household effects in Australia.

You receive interest income from your bank account and shares in Australia.

You lived with your parents in Australia prior to going to country Y.

Your country Y employer has expressed interest in extending their sponsorship of your employment if you are able to renew your visa when it expires.

Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

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 Income Tax: Residency - permanent place of abode outside Australia (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 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.

(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 have gone to country Y for work purposes. At this stage you will return to Australia when your visa expires.

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

(iii) History of residence and movements

You lived with your parents in Australia prior to going to country Y to work.

(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.

Prior to going to country Y you worked and lived in Australia with your parents. You work in country Y. You rent a property in country Y. Your spouse has accompanied you to country Y.

(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.

When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 (Iyengar's case) also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not of itself exclude an individual from being a resident in the country visited. Further, the taxpayer in Iyengar's case 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 and was also considered to be a resident of Australia for income tax purposes.

You have not returned to Australia since leaving for country Y.

(vi) Purpose of visits to or absences from Australia

You have gone to country Y to live and work.

(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

Your girlfriend has accompanied you to country Y.

Your parents remain in Australia.

Business or economic ties

You have work in country Y.

You intend on staying for the duration of your visa.

Your employer has expressed interest in sponsoring you when your visa expires.

Assets

You have a bank account and house hold affects in country Y.

You have a bank account, shares and household affects in Australia.

Your case is similar to the taxpayer in Iyengar's case where the taxpayer was found to be a resident of Australia for tax purposes. In that case the taxpayer did not purchase substantial property whilst overseas, but retained assets in Australia.

(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 do not have a home in Australia.

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 will maintain a continuity of association with Australia for the relevant period.

As you meet the resides test, it is not necessary to consider remaining tests.

Residency status

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

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