Edited version of your private ruling

Authorisation Number: 1012576438905

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods

Year ended 30 June 2005

Year ended 30 June 2006

Year ended 30 June 2007

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ending 30 June 2014

The scheme commences on

1 July 2004

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

You do not have a spouse or partner.

You do not have any children of your own living in Australia.

You have parents, siblings and extended family living in Australia.

You have been worked overseas for an Australian employer for several years.

You intend to continue working overseas indefinitely.

You always knew that your career lay outside Australia.

The nature of your employment requires you to work outside of Australia in various countries for various periods of time.

You mostly entered the countries you worked in on a tourist visa and then your employer applied for a working visa.

Your visas were for a defined period of time.

Whilst you were in a particular country, you were provided with leased accommodation and used this accommodation as your home for the duration of the assignment in that country. The accommodation is always leased by an organisation related to your employer.

In regard to your overseas accommodation, a letter of offer from your employer states that it provides basic furnished housing and utilities for its employees. In some locations housing may be shared by more than one person. In locations where housing is not available the employee may be placed in a basic rooming house or hotel equivalent.

While in a particular place you made friends with local residents, enjoyed the local social scene and participated in local festivals and community activities.

The letter of offer from your employer states that your employer will make superannuation contributions on your behalf to your superannuation fund.

You have returned to Australia on average twice a year while you have been overseas.

The purpose of your return visits was to visit family and friends and some were for discussions with your employer.

On a couple of occasions, you returned to Australia for approximately two months.

When you return to Australia, you stay at the home of your parents, family or friends or at a hotel.

You own a house in Australia which is being leased.

You do not owe any monies on the property.

You have a superannuation fund and two bank accounts in Australia.

Your employment agreement requires you to have an Australian bank account.

You have some personal effects which include clothing and jewellery that you keep at your parent's house.

You do not own a vehicle or any significant items of furniture in Australia.

Your overseas assets comprise of small household effects and personal items.

You are not a member of any social or community clubs in Australia.

You have had your name removed from the Australian electoral roll.

You have not had your name removed from Medicare records and have renewed your Medicare card while you have been working overseas.

You do not have Australian private health insurance.

You are not a member of a superannuation scheme established under the Superannuation Act 1990

On your return trips to Australia, you most likely completed the Australian immigration card as a 'Resident returning to Australia' and on leaving Australia you completed the cards as an 'Australian resident departing temporarily'. You were thinking about your status as an Australian citizen, rather than as a foreign tourist, when completing the cards.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

Domicile Act 1982

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 'resides' test;

· the 'domicile' and 'permanent place of abode' test;

· the 183 day test; and

· the Commonwealth superannuation fund test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.

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'.

In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'.

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 with Australia compared to the foreign country concerned; and

(viii) maintenance of a place of abode.

The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In Shand v Federal Commissioner of Taxation 2003 ATC 2080, the Tribunal stated (at 35):

Questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms.

To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances.

(i) Physical presence in Australia

It is important to note that a person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Joachim v Federal Commissioner of Taxation 2002 ATC 2088, the Tribunal stated (at 2090):

Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.

As indicated in Iyengar v FC of T [2011] AATA 856; 2011 ATC 10-222 (Iyengar's case), there is a general requirement that you at least be physically present in Australia for part of an income year.

In your case, you have been working overseas for several years.

Although you have not been physically present in Australia for the majority of each income year since you commenced working overseas, this does not preclude you from being an Australian resident as no one single factor is necessarily decisive, as mentioned above.

(ii) Nationality

You were born in Australia and are an Australian citizen.

(iii) History of residence and movements

You were born in Australia. You have been working overseas for several years.

(iv) Habits and 'mode of life'

You have been working in various countries overseas for several years.

While in a particular place, you made friends with local residents, enjoyed the local social scene and participated in local festivals and community activities.

You have always stayed in accommodation that is leased and maintained by your employer or an organisation related to your employer. Your current employment agreement states that you will be provided with basic furnished housing and utilities and in some locations housing may be shared by more than one person.

The taxpayers in Iyengar's case, Sneddon v Federal Commissioner of Taxation [2013] AATA 516; 2012 ATC 10-264 (Sneddon's case) and Boer v. Federal Commissioner of Taxation [2012] AATA 574; 2012 ATC 10-269 (Boer's case) all lived in employer provided accommodation overseas which was not indicative of them maintaining their 'own' accommodation. This aspect was a contributing factor to them being considered residents of Australia.

Your day to day activities in the countries you worked in have been consistent with someone who is residing in these countries; however, you did not maintain your own accommodation in the accepted sense. Further, you have generally been staying in various places for temporary periods of time before either returning to Australia or moving to another country.

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

In Lysaght v Inland Revenue Commissioners (1928) 13 TC 511 the Court noted that the mere fact that visits to a country are of short duration does not of itself exclude residence in that country.

The taxpayer in Case 5/2013../../UA8PU$/imgview/Local Settings/Temporary Internet Files/Resident LRD Smith.doc - _ftn2#_ftn2#_ftn2#_ftn2 [2013] AAA 394; 2013 ATC 1-054 (Case 5/2013) was considered a resident of Australia despite only being present in Australia for five of the 52 weeks under consideration, as the Tribunal considered that his visits indicated that he retained a 'continuity of association' with Australia.

Similarly: 

· the taxpayer in Sneddon's case was considered to reside in Australia notwithstanding that he had only been present in Australia in the 2008-09 income year for separate periods of only two weeks, three weeks and two and half weeks; and

· 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.

In your case, you have returned to Australia on various occasions with a couple of these visits being of approximately two months duration. The frequency of your return visits along with the fact that you have chosen to spend your longer breaks in Australia, is indicative of Australia being your 'home base' and represents a continuing association with Australia.

On your return trips to Australia, you most likely completed the Australian immigration card as a 'Resident returning to Australia' and on leaving Australia you completed the cards as an 'Australian resident departing temporarily'. However, like the Tribunal in Murray and Commissioner of Taxation [2013] AATA 780 (Murray's case), we do not consider this to be a significant factor in deciding your residency status.

(vi) Purpose of visits to and absence from Australia

The purpose of your absence from Australia is to work overseas on an indefinite basis.

The purpose of your return visits to Australia has been to visit family and friends and to have discussions with your employer.

(vii) Family, business and financial ties

Family

Your parents, siblings and extended family reside in Australia and you visit your family on your return visits. You have stayed at the home of your parents and other family on at least some of these visits.

It is evident that you have stronger family ties to Australia than to any other country.

Business or economic

You have been working for an Australian employer and your salary is paid into your Australian bank account and superannuation contributions are made to your Australian superannuation fund.

You receive rental income from the house you own in Australia.

It is evident that you have stronger economic ties to Australia than to any other country.

You renewed your Medicare card while you were overseas; however, like the Tribunal in Murray's case, we do not consider this to be a significant factor in deciding your residency status.

Assets

Your assets in Australia comprise of a house, superannuation fund, bank accounts and some personal effects which include clothing and jewellery that you keep at your parent's house.

The assets you have with you overseas comprise of small household effects and personal items.

It is evident that you have stronger financial ties by way of your assets to Australia than to any other country.

(viii) Maintenance of a place of abode

The house you own in Australia is being leased so you are not maintaining a place of abode in Australia.

Summary of the resides test

As mentioned above, the weight given to each factor varies with individual circumstances, no single factor is necessarily decisive and the term 'reside' should be given a wide meaning.

In your case, although you have been physically absent from Australia for the majority of each year and will continue to be, there are various factors that indicate that you have not ceased to be a resident of Australia. These are primarily:

· you have not maintained your own place of abode while you have been working overseas;

· you have made regular return visits to Australia;

· you are employed by an Australian employer who is making Australian superannuation payments on your behalf; and

· you have stronger family and financial ties to Australia than any other country.

Based on the above, you have retained a continuity of association with Australia while you have been overseas and are residing in Australia according to the ordinary meaning of the word.

Therefore, you are a resident of Australia under the resides test of residency.

Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the 'domicile' and 'permanent place of abode' test as an alternative argument.

The domicile and permanent place of abode test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

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 (section 10 of the Domicile Act 1982).

In this regard, paragraph 21 of Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) states that:

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 e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice.

In your case, as you have not obtained a migration visa or become a permanent resident or a citizen of any other country, you have not established a new domicile of choice in in any other country. You were born in Australia and your domicile is still Australia.

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 (paragraph 12 of IT 2650).

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere (Applegate's case).

A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller.

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 (Applegate's case and Jenkin's case).

As previously discussed, the taxpayers in Sneddon's case, Iyengar's case and Boer's case all lived in employer provided accommodation overseas which was not indicative of them maintaining their 'own' accommodation and therefore having a place of abode in the accepted sense. This aspect was a contributing factor to them being considered residents of Australia.

In Boer's case, the Tribunal stated (at 22):

It is significant that Mr Boer did not have an exclusive right of possession of "his" unit in Oman; it was shared with another and, where it suited the convenience of Occidental to do so, Mr Boer (or his co-resident) could be required to occupy another unit owned by Occidental. That, to me at least, tells against the notion that the apartment was Mr Boer's permanent place of abode.

In your case, as already discussed, while in the countries you worked in, you have always stayed in accommodation that is leased and maintained by your employer or an organisation related to your employer. Your current employment agreement states that you will be provided with basic furnished housing and utilities and in some locations housing may be shared by more than one person.

These aspects are not consistent with establishing and maintaining your own accommodation, for example, by way of having some type of legal interest, having exclusive occupancy or furnishing the accommodation from your own resources.

We acknowledge that you do not have a place of abode in Australia and have been working in overseas countries for some years and intend to continue on this basis indefinitely. However, there are factors that indicate that you have not established a permanent place of abode outside of Australia. Specifically:

· you have always lived in employer provided accommodation while working overseas and have not established your own accommodation;

· you have maintained a durable association with Australia through your regular return visits and your strong family and financial ties.

Therefore, the Commissioner is not satisfied that you have established a permanent place of abode outside of Australia and therefore, you are a resident of Australia under the domicile and permanent place of abode test of residency.

Mynott's case and Case 12,551

In your private ruling application, you mentioned the case of Mynott v Federal Commissioner of Taxation [2011] AATA 539 (Mynott's case) as part of your argument supporting your view. In Mynott's case, the Tribunal found that the taxpayer's permanent place of abode was in the Philippines as he was in a domestic relationship there and had established his home there. He rented an apartment with the woman involved and financially supported her and her children. The taxpayer also had little in the way of financial connections with Australia. This contrasts with your situation where you have significant financial ties to Australia and have always stayed in employer provided accommodation during your overseas assignments.

You have also argued that your circumstances are substantially different from the taxpayer in AAT Case 12,551 (1998) 37 ATR 1263 (Case 12,551). In this case, the taxpayer went on an extended working holiday overseas and the Tribunal found that the taxpayer had not abandoned Australia as her domicile of origin and had not established a permanent place of abode outside Australia. However, in your situation, you have also not done anything to acquire an alternative domicile of choice and have always stayed in employer provided accommodation overseas which is not considered to be the same as establishing your own accommodation.

Your residency status

You are a resident of Australia for tax purposes for the income tax years covered by this ruling.

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