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This edited version has been archived due to the length of time since original publication.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: 1012829830159

Date of advice: 30 June 2015

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 2012

Year ending 30 June 2013

Year ending 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 20XX

Relevant facts and circumstances

You are an Australian citizen. You were born in Australia.

You moved to a foreign country to live and work.

You entered a foreign country with X year work visa.

The visa is required to be renewed after X years and requires employer sponsorship. You have since renewed. You have supplied copies of the visa.

You do not currently hold a return air ticket to Australia; or any other country.

You returned to Australia. The purpose of the trip was to visit family.

Your employer has provided you with subsidized accommodation for your sole use.

Your assets or investments are cash in a foreign country bank account and a similar amount in Australian dollars held in an Australian bank account.

You do not have a place to live in Australia. Prior to your departure you lived in rented accommodation.

Prior to moving to a foreign country, you sold the majority of your larger possessions and put smaller items into storage at someone's house.

You are not receiving any income from Australian sources.

Your initial contract and subsequent contracts have been for X year periods with the option to renew.

You quit your job in Australia and there is no job or position being held for you.

Your partner did not go with you to a foreign country. You have since separated. You have no children.

You have no significant social or sporting connections in Australia. Your only connections are family and childhood friends.

You have no significant sporting connections in a foreign country. Socially, most of your current friends also live in a foreign country, including your current girlfriend.

You have never been a Commonwealth Government of Australia employee for superannuation (super) purposes.

You have not advised the Australian Electoral Office to have your name removed from the electoral roll.

You have not advised Medicare and/or your health insurance provider to have your name removed from their records.

Your employer has lodged returns in a foreign country on your behalf every year from 20XX. You have provided copies.

You stated employment as the reason for going overseas when completing the Australian Immigration Outgoing passenger card.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Subsection 995-1(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 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:

The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650).

The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides.

However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

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.

There are several factors outlined above which indicate that you have not ceased to be a resident of Australia, specifically:

Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the relevant period.

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 and permanent place of abode test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned.

As you are still an Australian citizen while living in a foreign country, your domicile is Australia and remains unchanged.

Permanent place of abode

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.

The taxpayers in Boer v. Federal Commissioner of Taxation [2012] AATA 574; 2012 ATC 10-269 (Boer's case) lived in employer provided accommodation overseas which was not indicative of them establishing or maintaining their 'own' accommodation. This aspect was a contributing factor to them being unable to establish that they had a 'permanent place of abode' overseas. In your case, your employer has provided you with subsidised accommodation for your sole use.

Further, your continuing presence in a foreign country will be dependent on your employer sponsored work visa. Should your employment cease for any reason, you will be required to leave the country. Although it is your intention to live and work in a foreign country on an ongoing basis, the duration and continuity of your presence is contingent on your continued employment with your employer. This makes your presence in a foreign country temporary in nature.

You have not established a permanent place of abode in a foreign country as your presence in a foreign country is temporary in nature. You cannot establish a permanent place of abode when your presence in a place is temporary.

The Commissioner is not satisfied you have a permanent place of abode outside of Australia.

Therefore, you will remain a resident of Australia under the 'domicile and permanent place of abode' test of residency.

As you have passed two of the residency tests, in is not necessary to consider the 183-day test or the superannuation test

Your residency status

As you are a resident of Australia under two of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes for the years of the ruling.

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