| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012973654756
Date of advice: 29 February 2016
Ruling
Subject: Residency
Question and answer
Are you a resident of Australia for taxation purposes?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
Year ended 30 June 2020
Year ended 30 June 2021
Year ended 30 June 2022
Year ended 30 June 2023
Year ended 30 June 2024
Year ended 30 June 2025
The scheme commenced on:
1 July 2015
Relevant facts and circumstances
You were born overseas.
You are an Australian citizen.
You believe your overseas citizenship was renounced when you became an Australian citizen.
You have retired from full time employment.
You plan to travel for an extended period with your partner.
You will not be setting up a home in another country as you will be cruising from one country to another on a boat.
You plan to leave Australia in the near future for more than two years.
You will travel from one country to another.
You will return to Australia each year at Christmas or Easter for approximately 2 to 3 months.
You have a firm intention to return to Australia at the end of the boating holiday.
The enduring ties that you will have with Australia are as follows:
• Maintaining a family home.
• All bank accounts will be maintained.
• Superannuation fund will be maintained and will not be cancelled.
• 50% interest is family household goods and furniture at the family.
• Family ties including children.
• Motor vehicle will not be sold.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1936 subsection 6(1)
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.
The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:
• resides test
• domicile and permanent place of abode test
• 183 day test and
• Commonwealth superannuation fund test.
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:
(i) Physical presence in Australia
(ii) Nationality
(iii) History of residence and movements
(iv) Habits and "mode of life"
(v) Frequency, regularity and duration of visits to Australia
(vi) Purpose of visits to or absences from Australia
(vii) Family and business ties to different countries
(viii) Maintenance of place of abode.
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 plan to travel for an extended period with your partner.
You will not be setting up a home in another country as you will be cruising from one country to another on a boat.
You plan to leave Australia in the near future for longer than 2 years.
Based on the facts above you will not be residing in Australia according to ordinary concepts as you will be residing on a boat in foreign waters in excess of two years.
The domicile test
If a person's domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.
A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. You will retain your domicile of origin unless and until you acquire a domicile of choice in another country or until you acquire another domicile by operation of law. 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, e.g. through having obtained a migration visa.
Your domicile is Australia as you do not have a permanent resident visa in an overseas country.
You have not advised any Australian financial institutions, companies, or Medicare that you are a foreign resident.
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.
The enduring ties that you will have with Australia are as follows:
• Maintaining a family home.
• All bank accounts will be maintained.
• Superannuation fund will be maintained and will not be cancelled.
• 50% interest is family household goods and furniture kept at the family home.
• Family ties including children.
• Motor vehicle will not be sold.
You are a resident under this test.
Your residency status
You are a resident of Australia for taxation purposes for the period 1 July 2016 to 30 June 2025.
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).
