Edited version of your written advice

Authorisation Number: 1051213392630

Date of Advice: 11 April 2017

Ruling

Subject: residency status for tax purposes

Question and answer

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ending 30 June 2017

The scheme commenced on:

1 July 2016

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You were born in Australia.

You are a citizen of Australia.

Your spouse went to Country Y in January 20XX to work.

You and your children joined your spouse in July 20XX in Country Y.

You intended on being in Country Y for 4 plus years.

You rented a property in Country Y.

You took your belongings to Country Y and sold some before leaving Australia.

You notified government agency's that you were moving to Country Y.

You suspended your Australian health fund.

Your home in Australia was rented out.

You resigned from office bearing roles in Australian companies.

You appointed a power of attorney to your self-funded super fund.

You notified banks and share registers that you were moving overseas.

You returned to Australia for family reasons and you did not exceed 183 days in the relevant year.

You currently hold a visa which allows you to remain in Country Y while your spouse is employed.

Your spouse has been advised that their employment in Country Y will be terminated in April 20XY and you and your family will return to Australia.

Your spouse will return to Australia between April and July depending 20XY on when their visa is cancelled.

You and your children will return between April and June 20XY.

You and your spouse are not eligible to contribute to the PSS or the CSS super 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:

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 Taxation Ruling 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.

You and your children joined your spouse in Country Y in July 20XX.

You rent a home in Country Y.

You intended to living and work in Country Y for 4 plus years.

Your spouse's employment has been terminated and they will return to Australia between April and July 20XY.

You will return with the children between April and June 20XY.

Based on the facts above you are not a resident of Australia for taxation purposes as you did not maintain a continuity of association with Australia.

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 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.

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

You intended on being in Country Y for 4 plus years

Your spouse was working in Country Y

You rented a property in Country Y

You took your belongings to Country Y

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 in any financial year for the period you are living and working Indonesia.

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 and your spouse are not eligible to contribute to the relevant Commonwealth super fund.

You are not a resident under this test.

Your residency status

You are not a resident of Australia for taxation purposes for the period you are living and working in Indonesia.

You will become a resident of Australia for taxation purposes once you return to Australia.

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).