Edited version of private advice

Authorisation Number: 1012632505449

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

The scheme commences on

On or after 1 January 2013

Relevant facts and circumstances

You were born in Australia.

You commenced employment with a company in Australia.

You decided to relocate to the foreign country so that you could more efficiently execute your duties. This progressed to acceptance of an offer of secondment with your Australian employer to and their branch in the foreign country for a period of a few years.

During the period between a date and a date, you worked in the foreign country while remaining employed by the Australian branch of the company.

On a date, you resigned from the Australia branch and as a result, your secondment with the branch in the foreign country was terminated. On a date, you became employed by the company's branch in the foreign country as a local hire.

During the period between a date and the present, you have held a visa enabling you to live and work in the foreign country. You have since had this extended to a future date.

On a date, you registered to submit a formal application for permanent residency in the foreign country on the basis that you intend to maintain your home indefinitely in the foreign country. There is a waiting queue and your application for permanent residency was formally submitted on a date. A decision on your application is still pending.

From a date to the present, you have resided in an apartment in the foreign country, under a long-term lease arrangement in your name. The lease on your apartment is current until a date.

Whilst your secondment in the foreign country officially commenced on a date, you signed a lease for your apartment on a date because regardless of the secondment outcome, you were determined to relocate to the foreign country.

During the period between a date and the present date, the signatory to the lease on your apartment has either been yourself or your Australia employer as set out below:

a. a date to a date - yourself;

b. a date to a date - your Australia employer; and

c. a date to the present - yourself.

The duration of the tenancy on your apartment is agreed every few years.

On a date, when you initially moved to the foreign country, you shipped your personal belongings, including clothing and sporting equipment, to your apartment in the foreign country. In addition, you furnished your apartment with household items including electrical goods, an entertainment centre and bedding.

You occupy your apartment on your own except when your partner visits you from another foreign country. On a date your partner was granted a visa allowing open access (entry and exit) to the foreign country.

You have two bank accounts in in the foreign country which you have held since a date. Since a date, being the day you became employed in the foreign country as a local hire, all of your employment income has been deposited into your bank account in the foreign country. Prior to this date, when you were an employee in Australia, you were paid a combination of Australian dollars and foreign currency into an account in foreign country and Australian account with an Australian bank.

On a date, you became covered under an international health insurance. Your membership commence on a date. You also have medical coverage with your employer in the foreign country.

On a date, you subscribed to a retirement plan in the foreign country.

On a date, you became a member of a society in the foreign country.

You have a child who lives in Australia with your ex-spouse and some relatives.

You have other family members in Australia.

You have undertaken a process of closing previous economic and social ties to Australia.

You own a property in Australia which is being rented out.

You have cancelled your internet service and pay TV service to your Australian dwelling.

You have notified Australian banks with which you had held accounts of your relocation to the foreign country.

You also began the process of closing accounts and cancelling credit cards with the above mentioned banks.

Your Australian superannuation fund has remained dormant.

Your Australian mail has been redirected to your apartment in the foreign country.

Your name has been removed from the Australian electoral roll.

You have cancelled your private health insurance in Australia.

You have notified companies with which you have investment of your move to the foreign country.

You have sold your Australian motor vehicle. You also cancelled your comprehensive car insurance.

You have let your social club memberships in Australia lapse.

You have made several short trips back to Australia.

You are required to travel to Australia and other countries within the region in your business role. During your time in Australia, you generally stay in hotels.

You confirm that you are not:

a. a member of the superannuation scheme established by deed under the Superannuation Act 1990; or

b. an eligible employee for the purposes of the Superannuation Act 1976; or

c. the spouse of a person covered by sub-paragraph (a) or (b).

You are over the age of 16.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(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 '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 its 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.

Further, in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA, the Tribunal stated (at 62):

Physical presence in a country for some period during a particular year of income is usually considered by the courts as necessary in order that a person should be resident in that country during that particular income year. However, there have been exceptions to this: Rogers v Inland Revenue Commissioners (1879) 1 TC 225 and Slater v Commissioner of Taxation (NZ) (1949) 9 ATD 1.

You commenced employment with your employer on a date.

You relocated to the foreign country to live and to work for an associated company.

You have lived there in a leased apartment.

At this time you shipped your personal belongings to your apartment in the foreign country as well furnishing it with electrical goods, an entertainment centre and bedding.

You have held a visa enabling you to live and work in the foreign country. You have since had this extended.

You registered to submit a formal application for permanent residency in the foreign country. After a waiting period your application for permanent residency was submitted on a date. A decision on your application is still pending.

Since first departing Australia, you have returned to Australia for short work related visits.

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

(iii) History of residence and movements

Prior to you move to the foreign country you lived and worked in Australia.

You relocated from Australia to the foreign country to live and to work on secondment from your Australian employer to an associated company.

From then to the present you have lived there in a leased apartment in the foreign country.

You resigned from your Australian and became employed by the associated company in the foreign country.

Since moving to the foreign country you have made short visits to Australia mostly for work but also for rest.

You have applied for permanent residency status.

(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 have lived outside Australia since a date having made the intention to live and work in the foreign country permanently.

You have applied for permanent residency status in the foreign country.

You live in a rented apartment in the foreign country.

You have family in Australia.

You have a partner who visits you from another foreign country, who shares your apartment in the foreign country.

You are member of a society in the foreign country.

You have let your membership with a club in Australia lapse.

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

You have cancelled your private health insurance in Australia.

You have notified your share registry of your relocation to the foreign country.

Your Australian mail has been redirected to your apartment in the foreign country.

You have sold your Australian car.

You have leased your Australian property in Australia.

You have cancelled your internet and pay TV services to your Australian property. The property has now been leased.

You have notified your Australian banks of your relocation to the foreign country. You have begun the process of closing accounts and cancelling credit cards with these banks.

You have stopped making contributions to your Australian superannuation fund.

(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 period of two years and seven months to be residing in Australia.

Since moving to the foreign country you have made short visits to Australia mostly for work but also for rest.

During the income year from 1 July 2012 to 30 June 2013, you spent short periods in Australia.

During the income year from 1 July 2013 to 30 June 2014, you spent short periods in Australia

(vi) Purpose of visits to and absence from Australia

Your visits to Australia are mostly work related.

(vii) Family, business and financial ties

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 family lives in Australia.

You have a partner who visits you from the other foreign country who shares your apartment in the foreign country.

Business or economic

You work for a company in the foreign country.

You have a rental property in Australia.

You own shares in Australian companies.

Assets

You own a rental property and shares in Australia.

You have a superannuation account in Australia.

You have bank accounts in the foreign country.

You have taken out health insurance in the foreign country.

Your personal belongings, including clothing, sporting equipment, furniture electrical goods and an entertainment centre are in the foreign country.

(viii) Maintenance of a place of abode in Australia

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

Your dwelling in Australia which has been rented.

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.

You relocated to the foreign country to live and to work for a company.

You have established a home in the foreign country in a rented apartment.

You have moved your belongings to your apartment in the foreign country.

You have rented out your Australian dwelling.

You have applied for permanent residency status in the foreign country.

You have returned to Australia for work related visits and occasionally for rest.

You have advised Australian companies and financial institutions that you have moved to the foreign country. You are in the process of closing your Australian bank accounts and credit cards.

You advised the Australian Electoral Office to have your name removed their records.

You have cancelled your private health insurance in Australia.

On a date, you registered to submit a formal application for permanent residency in the foreign country on the basis that you intend to maintain your home indefinitely in the foreign country. There is a waiting queue and your application for permanent residency was formally submitted on a date. A decision on your application is still pending.

Based on the above, you have not retained a continuity of association with Australia while you have been living and working overseas and you will not be residing in Australia according to the ordinary meaning of the word.

Therefore, you are not a resident of Australia under the 'resides' test of residency as you are not residing in Australia according to ordinary concepts.

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