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This edited version has been archived due to the length of time since original publication.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: 1013117822242

Date of advice: 8 November 2016

Ruling

Subject: Residency

Question

Are you an Australian resident for income tax purposes?

Answer

No

This ruling applies for the following period:

Year ending 30 June 20YY

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You have moved to Country X.

You have been offered an on-going full time position in Country X.

You have a visa which allows you to enter Country X.

Your visa does not allow you to stay in Country X permanently.

You will need to renew your visa every two years.

You will return to Australia for one visit each year.

The visit will not exceed 183 days.

You intend to apply for Country X's permanent resident visa or citizenship after 4 years.

You have informed the Australian Electoral Commission and Medicare that you are departing Australia.

You were renting with friends before your departure.

You have sold all your household effects and personal effects in Australia prior to your departure.

You will maintain a nominal amount in your Australian bank account.

You do not have any property in Australia.

You will not maintain any professional, social or sporting connections with Australia.

You have a spouse who is a citizen of Country X.

You do not have any dependents.

You will rent an apartment with your spouse in Country X.

You will be living in one place for approximately 4 years.

You will purchase a car, open a bank account and invest in Country's stock market while overseas.

You will have the majority of your money deposited into your Country X's bank account.

You will obtain a Country X's driver's licence.

You intend to establish professional, social or sporting connections in Country X.

Both you and your spouse are not Commonwealth Government of Australia employees for superannuation purposes.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

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 (ITAA 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 Taxation Ruing IT 2650 Income tax: residency - permanent place of abode outside Australia 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.

In your case, you have moved to Country X. You have been offered an on-going full time position in Country X. You have informed the Australian Electoral Commission and Medicare that you are departing Australia. You have sold all your household effects and personal effects in Australia prior to your departure. You do not have any property in Australia. You will not maintain any professional, social or sporting connections with Australia. You will rent an apartment with your spouse in Country X. You will be living in one place for approximately 4 years. You will purchase a car, open a bank account and invest in Country X's stock market while overseas. You will have the majority of your money deposited into your Country X's bank account. You will obtain a Country X's driver's licence. You intend to establish professional, social or sporting connections in Country X.

Based on the facts above you are not residing in Australia according to ordinary concepts.

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.

Domicile

Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.

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.

In your case, you were born in Australia and you are a citizen of Australia; therefore, your domicile of origin is Australia.

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 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 Commissioner is satisfied that you have 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 return to Australia for one visit each year. You will not be in Australia for more than 183 days.

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 a contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. You will not be treated as a resident under this test.

Your residency status

Based on the facts you have provided, you do not satisfy any of the tests of residency outlined in subsection (1) of the ITAA 1936 after your departure. Accordingly, you are not a resident of Australia of taxation purposes.

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