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This edited version has been archived due to the length of time since original publication.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: 1012564298306

Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for tax purposes while you are living in Country A?

Yes

This ruling applies for the following period:

Year ended 30 June 2013.

The scheme commences on:

1 July 2012

Relevant facts:

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 are a citizen of Australia.

Your country of origin is Australia.

You departed Australia to accompany your spouse to Country A where they are working. You are not working in Country A.

Your spouse has employment in Country A for a certain period of time.

You returned to Australia for a holiday and during that time you undertook some temporary work.

You have been living in a house provided by your spouse's employer.

You have a bank account in Country A.

You have a property in Australia which you are currently renting out while you are overseas, and some Australian superannuation.

You are not and have not been a Commonwealth Government employee.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income tax Assessment Act 1997 Section 995-1(1).

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the 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.

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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.

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'.

In considering the definition of 'reside', the courts have stated that the word 'reside' should be given the widest meaning.

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:

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 Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249):

You have been living in Country A but returned for a holiday of two months or less duration. You intend to return to Australia once your spouse's employment contract is completed.

(iii) History of residence and movements

You are a citizen of Australia who has previously worked here.

You are living in Country A only for as long as your spouse has employment there.

(iv) Habits and "mode of life"

You are living in Country A with your spouse in accommodation provided by their employer. You are not working in Country A.

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

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.

The Administrative Appeals Tribunal (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 have returned to Australia for a holiday of less than two months duration during which you did some temporary work.

(vi) Purpose of visits to or absences from Australia

The purpose of your absence from Australia is to live with your spouse while they are employed in Country A.

As stated above, you returned to Australia for a holiday and undertook some temporary work.

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

Family

You have accompanied your spouse while they are employed in country A.

Business or economic ties

You were working in Australia prior to you accompanying your spouse to Country A. You intend to return to Australia on completion of your spouse's employment in Country A. You are not working in Country A.

Assets

You have Australian superannuation and a home in Australia which you are currently renting out. You have a bank account in Country A.

Maintenance of Place of abode in Australia

You and your spouse will return to live in Australia on the completion of your spouse's employment in Country A.

You own a property in Australia which you are currently renting out while you are overseas.

Summary

As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning.

There are various factors outlined above which indicate that you will not cease to be a resident of Australia while you are overseas. Specifically:

· You will not be working in Country A, and you are only living in Country A while your spouse is working there;

· You intend to return to Australia to live when your spouse's employment contract is completed;

· You returned to Australia and worked for a period;

· You have a house in Australia (being rented out while you are overseas); and

· You are an Australian citizen.

You will be a resident under the resides test of residency for the income tax year ending 30 June 20XX.

As you are a resident under this test, it is not necessary to determine whether you meet the requirements of the other three tests of residency. 

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