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This edited version has been archived due to the length of time since original publication.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

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Edited version of private advice

Authorisation Number: 1012682027014

Ruling

Subject: Residency for tax purposes

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

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

You have not been granted permanent residency of any other country.

You are working overseas.

You have a work visa which allows you to be in Country Y for the duration of your employment.

You have an E-passport which you enter and exit Country Y on.

The visa does not allow you to remain permanently in Country Y.

You do not intend on returning to Australia to live and work.

You return to Australia on a regular basis to visit your family and friends.

Your spouse may join you in the future in Country Y.

You live in shared rental accommodation in Country Y.

You have a home in Australia which your spouse lives in.

You have the following assets in Australia:

You have the following assets in Country Y:

You have advised the Australian electoral commission to remove your name from the roll.

Neither you, nor your spouse, are eligible to contribute to the relevant Commonwealth super funds.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Section 6-1.

Income Tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1997 Section 995.

Reasons for decision

Residency

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.

The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:

The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides.  If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

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 (TR 98/17).

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

You were born in Australia and you are a citizen of Australia. You are not a permanent resident of any other country.

You went to Country Y to work. Your spouse did not accompany you to Country Y and remains in your home in Australia. You make regular trips back to Australia to visit family and friends. Your work visa only permits you to be present in Country Y for the duration of your employment. You live in shared rented accommodation in Country Y.

You hold accounts in Country Y and you have a home in Australia which your spouse lives in.

In your case, although you are physically absent from Australia, there are various factors that indicate that you are still a resident of Australia. These are primarily:

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

In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period.

In your case you have obtained work with in Country Y and you stay in shared rented accommodation in Country Y. Your spouse remains in Australia in your home.

In your case you have chosen to accept a job outside Australia in Country Y and you therefore remain a resident of Australia for taxation purposes.

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 test

If a person's domicile is Australia they will be 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 have not changed your domicile as you are not a permanent resident or citizen of another country.

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

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

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