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This edited version has been archived due to the length of time since original publication.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: 1013112834477

Date of advice: 25 October 2016

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes from X?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XY

Relevant facts and circumstances

You are a country A citizen and the country A is your country of origin.

You were granted permanent residency in Australia in X.

You departed Australia on X.

From X you were in Australia for X days, specifically:

X - X

X - X

X - X

Your movements between X - X were as follows:

X - X: location - country A, to visit family.

X - X: location - Australia

X - X: location country B, business trip

You returned to Australia during this time to continue working at your business (in order to support yourself and your dependants) and to prepare for leaving Australia permanently.

Your destination overseas is principally country B and other overseas countries.

Your intention is to live overseas permanently in close proximity to your partner in country B, study foreign languages and culture, travel, and live and work as a XX.

You do not intend returning to Australia.

You do not require a visa to enter certain overseas countries. These countries grant a temporary visitor landing permission and country B is extendable for X days. You entered other countries on tourism visas.

You cannot stay permanently in any of these countries.

In Australia your only asset is a bank account which you use to provide family assistance.

You do not receive income from any Australian sources.

You have never been on the electoral roll.

You did not have investments with Australian financial institutions or companies.

You have cancelled your private health insurance, but have not advised Medicare to remove your name from their records.

You are not eligible to contribute to the relevant Commonwealth super fund.

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 were granted permanent residency in Australia in X.

Your movements between X - X were as follows:

X - X - country A, to visit family.

X - X: location - Australia

X - X: location country B, business trip

You returned to Australia during this time to continue working at your business (in order to support yourself and your dependants) and to prepare for leaving Australia permanently.

You departed Australia on X.

You do not receive income from any Australian sources.

You have never been on the electoral roll.

You did not have investments with Australian financial institutions or companies.

You have cancelled your private health insurance, but have not advised Medicare to remove your name from their records.

Based on the facts above you were not residing in Australia according to ordinary concepts from X onwards. Prior to X Australia was your base while you worked and visited family overseas.

The domicile test

If a person's domicile is 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 country A. Your domicile of choice was Australia.

The Commissioner is satisfied that you had a permanent place of abode outside Australia from X for the following reasons:

From X 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 were in Australia less than 183 days in the 20XY year of income, however, the Commissioner has determined that you were residing in Australia and Australia was your domicile of choice prior to X.

You are not a resident under this test from X onwards.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to Commonwealth super funds, 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 employee.

You have advised that you are not eligible to contribute to the relevant Commonwealth super fund.

You are not a resident under this test.

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