Disclaimer
This edited version has been archived due to the length of time since original publication.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: 1012810629026

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for tax 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 commences on:

1 July 20XX

Relevant facts and circumstances

You were born in the Country A and are a Country A citizen.

You obtained permanent residency in Australia in 199X and you are an Australian citizen.

You lived in a house you owned in Australia prior to your departure to Country B

You departed for Country B in 20XX.

You have a working resident's visa in Country B and you are entitled to stay there permanently.

You moved to Country B for permanent employment with Employer A.

You intend to reside in Country B for employment purposes but you will eventually return to Australia at an unspecified time in the future for either employment or in retirement. You spend most of your off-work time in Australia.

You spend a definite more than 183 days out of Australia, either in Country B or elsewhere, for work purposes.

You return to Australia multiple times a year to visit your spouse and child.

You have an employer provided house in Country B that is for your sole use.

You have a bank account, motor vehicle and household effects in Country B.

You have a house in Australia where your spouse and child live.

Your spouse has not accompanied you because she/he works in Australia.

Your house is fully furnished, you own X cars and a trailer, and you have a bank account in Australia.

You do not receive income from Australian sources.

You play sport and have social drinks with work colleagues in Country B.

Your tax contributions in Country B are dealt with by your employer.

You stated 'employment' as your reason for leaving Australia on the Australian Immigration Outgoing passenger card.

You have not yet advised the Australian Electoral Commission, Medicare or your health insurance provider, and Australian financial institutions that hold your investments that you are a foreign resident. You are waiting for the outcome of this private ruling before you notify them.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Residency for taxation purposes

Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are:

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.

In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word:

Based on the facts of your case, the Commissioner accepts that you were not residing in Australia according to the ordinary meaning of the word from August 20XX to November 20YY.

The domicile test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin.

In your case, your domicile of origin was in Country A. Your domicile of choice became Australia when you were granted permanent residency and became an Australian citizen.

We consider that you have not made Country B your permanent place of abode because:

The Commissioner is not satisfied that you have established a permanent place of abode outside Australia therefore you are a resident under this test.

Your residency status

As you meet the domicile test of residency, you are a resident of Australia for taxation purposes. You are required to declare all your income derived both in and out of Australia in your Australian tax return.

Ruling restricted to four years

The Commissioner does not generally provide rulings for indefinite periods due to potential changes to the law in the future and also to potential changes to the facts and circumstances of the case.

For this reason this ruling has been restricted to the period covered by the four financial years up to the year ended 30 June 2018. However, this does not mean that you are required to apply for a new ruling after four years. In the absence of any change to the legislation or material change to your circumstances, the interpretation of the law as explained in this ruling will continue to apply.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).