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This edited version has been archived due to the length of time since original publication.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: 1012932812054

Date of advice: 6 January 2016

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for tax purposes?

No.

This ruling applies for the following period:

Year ended 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You were born in country X and are a citizen of country X.

You were granted status as a permanent resident of Australia after having held a temporary resident visa for several years.

Your spouse was also granted permanent residency after having held a temporary resident visa for several years.

Your spouse intends to apply for Australian citizenship.

You do not intend to apply for Australian citizenship.

You have a residence in country X.

You have always lived in country X and you do not intend to move or relocate elsewhere.

You and your spouse have children with some living in country X and others living in Australia.

Your Australian based children moved to Australia to attend school.

Your spouse moved to Australia to be near the children.

Your spouse has lived in Australia for several years.

Your spouse may return to live with you in country X.

Your spouse runs a business through a company that you and your spouse jointly control. You have played no active role in the business or the affairs of the company.

You own and operate a business through a company in country X and also engage in investment activities in country X through another company.

You control another foreign company that has lent funds to an Australian company in which one of your children is involved. The Australian company is undertaking a property development. You are also involved with a trust established in Australia which has a partial ownership interest in the property development.

The other foreign company has also lent funds to other Australian entities which are undertaking another property development. The company has a partial ownership interest in the development.

You have given funds to your spouse and your Australian based children to purchase homes and investment properties in Australia.

Over several years, you have visited Australia for periods of generally between two and three weeks on each occasion. You spent less than 120 days in Australia in the relevant year.

When you visit Australia, you usually stay with your spouse's residence.

You have not transported any significant personal possessions to Australia from country X and you travel with your personal luggage.

Almost all of your personal possessions are in country X.

When in Australia, you spend your time with family and friends and inspect the property developments you have an interest in.

You conduct a bank account in Australia which contains sufficient funds to meet your expenses when you are in Australia.

You have no other assets in Australia.

You have private health insurance in Australia as your spouse included you in her policy when it was taken out.

You do not have a Medicare card.

You and your spouse have never been a member of a superannuation scheme established under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

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:

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.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, [Multimedia], version 5.0.0 (2001), is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

The Commissioner's view on the resides test is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia (TR 98/17).

An individual may be considered a resident under the resides test if their behaviour is such that they exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia according to the ordinary meaning of the word 'reside'.

In your case, you have been granted permanent residency status of Australia and have significant ties to Australia through your spouse, your children and your related company lending activities and company and trust investments.

However, there are several factors that indicate that you were not residing in Australia during the relevant income year, specifically:

Based on the information provided, you did not exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia during the year.

Therefore, you were not a resident of Australia under this test.

The domicile 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.

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.

In your case, your domicile of origin is country X.

Although you have been granted permanent residency status of Australia, there is insufficient evidence to say that you have, or had, an intention to make your home indefinitely in Australia, as evidenced by:

Therefore, your domicile is still country X and you were not a resident of Australia under this test for the year.

The 183-day test

Under this test, a person who is in Australia for 183 days or more during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

You were not a resident under this test as you were not in Australia for 183 days or more during the year.

The superannuation test

An individual is considered to be a resident if that individual is a member of a superannuation scheme established under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, or that person is the spouse or child under 16 of such a person. 

You were not a resident under this test as you are not a member of a superannuation scheme established under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, a spouse of such a person, or a child under 16 of such a person.

Your residency status

As you do not meet any of the above tests, you were not a resident of Australia for tax purposes for the relevant income year.

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