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This edited version has been archived due to the length of time since original publication.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: 1051193828066

Date of Advice: 23 February 2017

Ruling

Subject: Residency status

Question and answer:

Are you a resident of Australia for income tax purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2016

The scheme commences on

1 July 2015

Relevant facts and circumstances

You were born in Country A.

You are a citizen of both Australia and Country C.

You have a spouse and dependants who were all born in Country C.

After a number of years you became a citizen of Australia and an Australian resident for income tax purposes.

You left Australia to live and work in Country E.

You entered Country E on a work visa.

While living in Country E you returned to Australia almost annually for short periods.

After a number of years you acquired a residential property in Country C.

After a number of years, you and your family left Country E due to security concerns and moved to Country C where you have lived and worked.

While living in Country C, you gained Country C citizenship.

For many years you were a health care professional in Country C.

Your tax agent granted the ATO authority to use information systems to determine your movements in and out of Australia.

From 2004 - 1 February 2017 you have returned to Australia on 6 occasions for periods of up to 21 days. On these occasions you returned for the purpose of visiting family and taking care of any financial matters. During the 2016 income year you were not physically present in Australia.

Since moving to Country C, you have returned to Australia on a number of occasions for short periods. On these occasions you returned for the purpose of visiting family and taking care of any financial matters. During the 20XX income year you were not physically present in Australia.

For many years you have lodged Australian income tax returns and declared yourself to be a foreign resident for income tax purposes in each return.

You have been lodging income tax returns in Country C since your arrival.

You have not been required to inform the Australian Electoral Commission that you are no longer residing in Australia as you have not been on the electoral role for many years.

Your assets in Australia consist of rental properties, bank accounts and superannuation accounts.

Your assets in Country C consist of your family home and bank account.

You and your spouse have never been employees of the Commonwealth Government of Australia.

Your intention is to return to Australia in a number of years, after your children graduate from university.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

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 first two tests are examined in detail in taxation ruling no. IT 2650 income tax: Residency - Permanent Place of Abode Outside Australia.

The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

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, 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, 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'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, discusses the Commissioners view on the application of the 'resides' test when determining an individual's residency status. Although Tax Ruling TR 98/17 considers the residency status of individuals entering Australia, the same principles can be applied to those departing Australia.

Paragraph 18 of Tax Ruling TR 98/17 provides;

As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for
six months at the same location) they may satisfy the 'resides' test.

In your case, for a number of years you have lived and worked in Country C. During these years you have been accompanied by your spouse and dependants. Since moving to Country C you were only physically in Australia a limited number of occasions for short periods, further in the income year in question you were never physically in Australia. Based on these facts you have not exhibited a degree of continuity, routine or habit that is consistent with someone who is residing in Australia, particularly in the income year in question.

Therefore, you were not residing in Australia according under this test.

The domicile test

If a person is considered to have their domicile in Australia they will be considered 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 prove an intention to make his or her home indefinitely in that country. 

In your case you were born in Country A, therefore your domicile of origin is Country A. You later moved to Australia and became an Australian citizen, therefore electing Australia as your domicile of choice. You then moved to Country E, followed by a move to Country C where you have remained. While in Country C you gained Country C citizenship, therefore electing Country C as your domicile of choice. From the information that you have provided there has been no change to your Country C domicile.

Therefore, as you have a Country C domicile, you are not a resident of Australia under the domicile test.

The 183-day test

Where a person is present in Australia for more than183 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 not physically present in Australia during the 20XX income year, therefore you are not a resident of Australia for income tax purposes under this test.

Accordingly, you are not a resident of Australia for income tax purposes under 'the 183-day test'.

The Superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.  Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

As you, your spouse or dependants have never been a member of a CSS or PSS you are not a resident of Australia under this test.

Accordingly, you are not a resident of Australia under 'The Superannuation Test'.

Your residency status

As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not an Australian resident for income tax purposes.

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