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This edited version has been archived due to the length of time since original publication.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: 1013091424760

Date of advice: 15 September 2016

Ruling

Subject: Residency

Questions and answers

Were you a resident of Australia for taxation purposes for the period you were in Country Y?

Yes.

Is your income derived in Country Y assessable in Australia?

Yes.

Will you be a resident of Australia for taxation purposes for the period you are working in Country Z?

No.

Will your income derived in Country Z be assessable in Australia?

No.

This ruling applies for the following periods:

Year ended 30 June 2016

Year ending 30 June 2017

The scheme commenced on:

1 July 2015

Relevant facts and circumstances

You were born in Australia and you are a citizen of Australia.

You are not a permanent resident of any other country.

You went to Country Y for work purposes.

You had a 12 month multi entry business visa to enter Country y.

You were required to leave Country Y after X days as per your visa conditions and you visited X or Country Z before entering Country Y again.

You returned to Australia X times during your stay in Country Y each visit was for a holiday and to visit family and friends and was less than 2 weeks in duration for each visit.

Your employer provided your accommodation in Country Y which was for your sole use.

You were living with your parents prior to going to Country Y.

You left your personal belongings at your parents' house while you were in Country Y.

You have a car, bank account and camera etc. in Australia.

Your salary was paid into your Australian bank account while you were working in Country Y.

You made child support payments to your ex-spouse while you were in Country Y.

You did not have your name removed from the electoral roll while you were in Country Y.

Your income was subject to tax in Country Y.

You stated on the outgoing passenger card that you were going to Country Y for business when you left Australia.

You went to Country Z for work purposes.

Your work contract is permanent and you intend on being in Country Z indefinitely.

You currently have a X day business visa for Country Z and your employer has applied for a work visa which will allow you to stay in Country Z for X months before it needs to be renewed.

You will live in rented accommodation in Country Z which will be at your own expense after the first month.

You will return to Australia approximately X times a year while in Country Z to visit family and each trip will not exceed X weeks.

You will stay with your parents when you return to Australia.

You will continue to make child support payments to your ex-spouse while you are in Country Z.

You are not eligible to contribute to the relevant Commonwealth Government Superannuation 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 went to Country Y for work purposes.

You returned to Australia for holidays while in Country Y and stayed with your family.

You paid child support to your ex-spouse while in Country Y.

You were required to leave Country Y every X days under the terms and conditions of your visa in Country Y.

Based on the facts above you have maintained a connection to Australia according to ordinary concepts for the period you were in Country Y and you were a resident under this test.

It is not necessary for us to consider the remaining three tests.

You have gone to Country Z for work purposes.

You have a permanent work contract in Country Z and you will remain in Country Z indefinitely.

You will return to Australia for visits and stay with your parents.

You will pay your ex-spouse child support while you are in Country Z.

You will rent accommodation while you are in Country Z.

Based on the facts above you will not maintain a connection with Australia according to ordinary concepts.

You will not be a resident under this test.

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.

Your domicile of origin is Australia.

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.

It is the Commissioner's view that an overseas stay in excess of two years may indicate that an individual can be considered to have a permanent place of abode overseas, subject to a consideration of all the other relevant circumstances applying to the taxpayer (paragraphs 23, 25 and 27 of IT 2650).

The Commissioner is satisfied that you have set up a permanent place of abode outside Australia for the following reasons:

You are not a resident 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 will not be in Australia for more than 183 days while you are in country Z.

You are not a resident 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.

Your residency status

For the period you were working in Country Y you were a resident of Australia for taxation purposes.

As a resident of Australia for taxation purposes you are required to declare your worldwide income in your Australian tax return.

This means you are required to declare the income you derived in Country Y in your Australian tax return.

For the period you are in Country Z you are not a resident of Australia for taxation purposes.

As a non-resident of Australia for taxation purposes you are only required to declare your Australian sourced income in your Australian tax return.

You are not required to declare your income derived in Country Z in your Australian tax return.

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