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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1012813095019

Ruling

Subject: International - Residency

Questions and answers

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following period

1 July 2014 to 30 June 2015

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.

Prior to departing Australia, you were a long term resident of Australia.

You departed Australia, for an overseas country, on a permanent basis with your spouse and you declared you were a resident leaving Australia permanently.

You commenced your employment as company director of a company overseas. The position will continue for an indefinite period. The company acquired company X, of which you were a shareholder and director. As part of your employment with the company, you have maintained your role as director of company X.

The company has operations in Australia and the Board Meetings are regularly conducted in Australia.

As part of your employment with the company, you are required to travel to Australia to attend Board Meetings approximately six times a year. These visits are generally for 1-2 days at a time, but may be longer when required to meet with staff and suppliers.

When travelling to Australia to attend Board Meetings you stay with family and friends or at hotels. You have never stayed in the family home when visiting Australia.

Upon leaving Australia you listed the family home for sale. However, due to the downturn in the luxury property market, you and your spouse have been unable to obtain an acceptable offer for the property.

Whilst the home has been listed for sale, you employed house sitters to occupy and maintain the property. More recently a 12 month lease was entered into; a condition of this lease is that the property must be available for viewing by prospective purchasers.

You and your spouse have entered into long term residential leases in the overseas country.

You and your spouse acquired a luxury boat. The boat is moored on a permanent basis in a harbour of the overseas country under a long term agreement, and provides an alternative source of accommodation to you.

You sold your Australian motor vehicle at or around the time of your permanent departure from Australia and acquired a motor vehicle in the overseas country for exclusive use by you and your spouse.

You notified the Australian Electoral Roll of your change in address and removed yourself from the electoral roll.

You have maintained bank accounts in Australia, these collect passive investment income.

You have established bank accounts and credit cards in the overseas country. Your employment salary is deposited into these bank accounts.

You cancelled your private health insurance in Australia and obtained private health insurance in the overseas country.

You have taken out club memberships in the overseas country.

You have invested, through your self-managed super fund, in a venture in the overseas country and have been appointed to the Board of Directors. You will be actively involved in the everyday management and control of the new venture.

You have been taxed as a resident of the overseas country and paid tax in Australia at the marginal rates applicable to non-residents.

You have not spent more than 100 days in Australia in any given financial year.

You are not eligible to contribute to a Commonwealth superannuation scheme.

You have children, however they are all adults, and none of them are dependent on you.

You may return to Australia on a permanent basis, later this year, to supervise renovations on the previous family home with the intention of remarketing the property for sale; however no firm arrangements have been put in place to that effect.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 section 6-5

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

You and your spouse have moved to the overseas country on a permanent basis.

You are employed in the overseas country.

You are trying to sell the family home in Australia.

You have notified the Australian Electoral Roll of your new overseas address and removed yourself from the roll.

You rent accommodation in the overseas country.

You have moved some of your belongings to the overseas country.

You have opened bank accounts and credit cards in the overseas country.

You have cancelled your private health in Australia and taken up private health in the overseas country.

You have purchased a luxury boat in the overseas country.

You have invested, through your self-managed super fund, in a venture in the overseas country.

You have been lodging tax returns in the overseas country and pay income tax in Australia at the marginal rates for a non-resident.

You only return to Australia for business and to see your family.

Based on the facts above you are not residing in Australia according to ordinary concepts.

The domicile test

If a person's domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that 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.

Your domicile of origin is Australia, however, based on the facts the Commissioner is satisfied that you have a permanent place of abode outside of Australia.

You are not a resident of Australia for taxation purposes under this test.

The 183-day test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

 You have not been in Australia for more than 183 days in a financial year.

You are not a resident of Australia for taxation purposes under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.

You are not eligible to contribute to the relevant Commonwealth super fund.

You are not a resident of Australia for taxation purposes under this test.

Your residency status

You are not a resident of Australia for taxation purposes.

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