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This edited version has been archived due to the length of time since original publication.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: 1051275780403

Date of advice: 29 August 2017

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes for the 2017 and 2018 income years?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2017

Year ending 30 June 2018

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 Country Y.

You are a citizen of Country Y.

You came to Australia on a Subclass 457 Visa and resided in Australia for a number of years.

You were married in the 201X income year to an Australian.

You and your spouse have a child together.

You left Australia on in the 201X income year to take up an employment contract in country Z.

The contract is for two years.

You rent accommodation in Country Z.

Your spouse and child remain in Australia during your employment contract.

Your spouse and child live in rented accommodation in Australia and the lease is in your name and your spouse’s name.

Prior to leaving for Country Z you lived with your spouse and have lived with them now for three years.

You financially support your spouse and child while you are working in Country Z.

You intend on returning to Australia at the end of your employment contract in Country Z.

You will re-enter Australia on a visitor’s visa when you return to Australia.

You applied for a spouse’s visa for Australia in the 201Y income year

You returned to Australia for two short visits in the 201Y income year and stayed with your spouse in Australia.

You have two children in Country Y which you financially support.

You made one short visit to Country Y in the 201Y income year to visit your children and you stayed with your parents during this 201Y visit.

You have made one short trip back to Australia to see your family in the 201Z income year.

Your spouse and child did not go to Country Z with you due to safety concerns.

You and your spouse are not eligible to contribute to the PSS or the CSS Commonwealth 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 Z in the 201X income year for work purposes.

Prior to going to Country Z for work you lived with your spouse in Australia.

You have a child with your Australian spouse.

Your spouse and child have not gone to Country Z with you.

You financially support your spouse and child in Australia.

You intend on returning to Australia at the end of your employment contract in Country Z.

Based on the facts above you are residing in Australia according to ordinary concepts.

In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period.

Your connection with Australia has not been broken because you are working overseas and have made trips back to Australia to visit your family.

Your connection with Australia remains strong due to the fact that your family have remained in Australia and you financially support your family in Australia.

In your case you choose to work outside Australia in Country Z which is your reason for being overseas and you therefore remain a resident of Australia for taxation purposes.

Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the ‘domicile and permanent place of abode’ test as an alternative argument.

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 Country Y and you have taken steps to change your domicile to Australia as you have applied for a spouse’s visa in June 201Y.

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 not satisfied that you set up a permanent place of abode outside Australia for the following reasons:

You are a resident under this test.

Your residency status

You are a resident of Australia for taxation purposes.

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