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This edited version has been archived due to the length of time since original publication.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: 1051306720331

Date of advice: 13 November 2017

Ruling

Subject: Residency for taxation purposes

Question 1

Were you a resident of Australia for taxation purposes?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commences on:

01 July 2011

Relevant facts and circumstances

You entered Australia part way through the period under a permanent resident visa

You purchased a house in Australia at that time

Due to work commitments you did not stay in Australia but obtained a rental property and allowed your child and their spouse to move into the house you had purchased

You own a house in Country A where you live

Your spouse stayed longer in Australia to be near the children

You spend significant time in Country A and other countries

You visits to Australia are for both business and personal matters

You have been employed by the Country A government in a number of positions for the period,

You have bank accounts in Australia which have been active prior to entering Australia

You have maintained your financial and social connections to Country A over the period

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision

Detailed reasoning

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation 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:

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

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

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 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.

In your case, although you have previously had the intention of migrating to Australia and residing here the hard facts of the matter do not indicate you acted on this intention.

Your “mode of life” did not change and you continued to have a minimal presence in Australia; you have been employed by the government of Country A and are currently employed by Employer A; you spend the majority of your time outside of Australia and when you visit the purpose is not solely just to see your family but also for business.

Although bank accounts have been maintained in Australia this is mainly because Australian banks service Country A residents; you have some ties to Australia through your family however your primary financial, business and social connections continue to be in Country A. Furthermore, you have not demonstrated that your intention is to return and reside in Australia.

Based on the facts, you are not residing in Australia according to ordinary concepts. Therefore, you are not a resident of Australia for taxation purposes under this test.

The domicile (and permanent place of abode) test

Under this test, a person whose domicile is Australia will be considered a resident of Australia for taxation purposes; 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.

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 of Australia for the following reasons:

You are a not a resident of Australia for taxation purposes under this test.

The superannuation test

The superannuation test is the third statutory test. This test covers current Australian government employees and states you are a resident if you are a member of the superannuation scheme established under the Superannuation Act 1990 or an ‘eligible employee’ for the purposes of the Superannuation Act 1976.

As neither you nor your spouse are eligible employees you are not a resident of Australia for taxation purposes under this test.

The 183 day test

As you have never been in Australia for 183 days or more within a year you are not a resident of Australia for taxation purposes under this test.

Conclusion – your residency status

You did not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936. Therefore, you are not a resident of Australia for taxation purposes.

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