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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1012799460347

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2015

The scheme commenced on:

1 July 2014

Relevant facts and circumstances

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 were born in Australia.

You are a citizen of Australia.

You were a resident of Australia for taxation purposes prior to your overseas trip.

You went to country A for a short visit and then to country B.

You had visitor's visas to enter both country A and country B.

You planned to leave the country B after a short stay and return to Australia.

You are currently detained in country B awaiting trial.

You went overseas on holidays.

You did not intend on leaving Australia permanently.

You have a home in Australia which you intended on returning to.

You have a job in Australia which is being held for you until you return.

You do not have a spouse.

You are not eligible to contribute to the PSS or the CSS.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Subsection 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 

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.

It is important to note that no 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 went to country A on a visitor's visa and then went to the country B a short time later on a visitor's visa for a holiday.

Your intention was to return to Australia on after a few weeks but you are currently being detained in the country B.

You did not intend on leaving Australia on a permanent basis.

The issue of your remand is a factor which has some bearing on the question of residency but at this stage it is not considered a significant factor. The effect of a short term detention on a person's residency status was, for example, considered in the AAT case of Murray v FC of T [2013] AATA 780.

In that case the taxpayer had a place of abode outside of Australia, but whilst here, he was found guilty of a crime and served an 18 month detention. In that case, although the Commissioner considered him an Australian resident for other reasons, it was accepted that the person's 18 month detention in Australia was not of itself enough to make him an Australian resident,

The AAT concluded that the taxpayer in that case was a non-resident prior to his detention and that the serving of the detention did not alter that position.

Based on your current facts and circumstances as noted above, it is considered that you are resident of Australia according to ordinary concepts.

Whilst it is not necessary to meet more than one test to determine residency for tax purposes; for completeness we will also discuss the 'domicile and permanent place of abode' test.

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 no intention of becoming a citizen or permanent resident of any other 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 in the country B for the following reasons:

In the absence of establishing that you have a permanent place of abode in country B, you are considered to be a resident under this test.

Your residency status

You will be a resident of Australia for taxation purposes for the period at issue.

As noted above, a person's residency status depends upon their full facts and circumstances. Should your circumstances subsequently change - for example if you become aware that you will be detained in the country B for an extended period and/or you rent or sell your Australian residence - you may wish to review your residency status based on these changes. This may include requesting a further ruling if you consider that necessary.

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