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This edited version has been archived due to the length of time since original publication.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: 1012813840170

Ruling

Subject: residency - leaving Australia

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commenced on:

1 July 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.

You are a citizen of Australia.

You were born in Australia.

You intend on taking up an employment contract in Country Y for 12-18 months.

At this stage you will be travelling on a business visa which does not allow you to stay permanently in Country Y.

Your spouse will accompany you to Country Y for the 12-18 months.

Your employer will provide you with accommodation, which will be a fully furnished flat which is for your sole use and your families use.

You will pay tax in Country Y on your income.

Your investments in Australia consist of a property which is in your name and is leased by one of your children and a Macquarie super fund.

You will store your personal and household items in Australia.

After you complete your 12-18 months in Country Y you will revert to a fly in fly out work contract in Country Y.

You will work Z days on and W days off.

You will return to Australia for the W days off and your spouse will not join you in Country Y for the Z days you are working there and will remain in Australia.

You and your spouse are not eligible to contribute to the relevant commonwealth super funds. Super funds.

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

You intend on taking up an employment contract in Country Y.

The contract will be for 12-18 months.

Your spouse will accompany you to Country Y.

At the end of the 12-18 months you will work for the same employer as a fly in fly out worker, working Z days on and W days off. You will return to Australia for the 28 days off. Your spouse will remain in Australia for the Z days you are working in country Y.

You will leave your personal and household items in Australia.

Based on the facts above you are residing in Australia according to ordinary concepts

You are a resident under this test.

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 is considered to have their domicile in 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.

The Commissioner is not satisfied that you have a permanent place of abode outside Australia for the following reasons:

You are a resident under this test.

Your residency status

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

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