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This edited version has been archived due to the length of time since original publication.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: 1051307870289

Date of advice: 14 November 2017

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2016

Year ended 30 June 2017

Year ending 30 June 2018

The scheme commences on:

28 August 2015

Relevant facts and circumstances

You were born in Australia, and are an Australian citizen.

You hold an Australian passport.

Prior to August 20xx

From 20xx to August 20xx (subject to paragraph below), you were employed on a full-time basis in Country A under two 2-year contracts (your first contract was extended for a further 2 years).

In 20xx, you terminated your employment in Country A prior to the expiry of the term of your employment contract to return to Australia due to the declining health of your parent. Your parent passed away within one month of your return to Australia and you then necessarily continued to support your other parent.

After returning to reside in Australia 20xx, you commenced full-time employment with in Australia. While you were employed, you became dissatisfied with the industry and opportunities within that industry in Australia.

In 20xx, you started exploring employment opportunities in overseas. You engaged a foreign recruitment agent as it was your wish to return permanently to work and reside in overseas.

After discussions with Employer X, you were informed that it might take 3 to 6 months for a role to become available.

You then started looking for other employment opportunities in Australia (your back up plan).

Within the 3 months, you were offered preferred role with Employer X in Country B and promptly resigned from Australian employment to commence the role.

From August 20xx

You entered into an employment agreement with Employer X in Country B (the Contract).

In 20xx, you departed Australia to relocate to Country B to live and work.

You were granted a work visa in which was cancelled in 20xx.

In 20xx, you were approached by your employer and were offered an appointment to a senior role in Country C.

In the same year, you were appointed as an Executive of Employer X in Country C for the period of 3 years.

In the same year, you commenced the role as Executive in Country C.

You were granted a Country C work visa on which is valid for 2 years.

In 20xx, Employer X would like you to remain as Executive in Country C for a period of 5 years due to the significant contribution you made.

It is your wish to work as a freelance consultant after no longer being employed by Employer X and to transition to semi-retirement.

You intend to apply for a Country C permanent residency visa when you become eligible. The visa will allow you to work in Country C without employer sponsorship.

You rented a private apartment in Country B while working in that country. You transported all your personal items to Country B and purchased furniture.

In 20xx, you arranged for your apartment in Country B to be subleased after you were seconded to Country C for the remainder of the term of the lease.

You leased an apartment in Country C for 12 months with an option to renew for a further 12 months.

During the 20xx income year, you continued to reside in that apartment. You entered a tenancy agreement for an apartment located at different location for a period of 1 year with an option to renew for a further 1 year.

You have all your personal possessions and effects in Country C.

Your mail is sent to your Country C address.

You have obtained a Country C Driver’s Licence and purchased a car.

You own two investment properties in Australia which are managed by a third-party real estate agent.

You own the following bank accounts:

You have informed Australian banks that you are not an Australian resident.

You own shares and have advised that you are not an Australian resident.

You are no longer a director of the company which acts as the trustee of your SMSF.

You have removed your name from the Australian Electoral Commission.

You have informed Medicare that you permanently departed Australia.

You have cancelled your Australian private health insurance.

You state on the outgoing passenger cards (at the time when paper passenger cards were in use) that you are departing Australia permanently.

Each time you visit Australia you state on the incoming passenger card that you are visiting Australia temporarily.

The principal purpose of any visit of you to Australia is not to resume residency in Australia but to spend time with your spouse, children and grandchildren and also for work purposes.

Your spouse lives in Australia at a residence he/she owns. Your relationship with your spouse is such that on each occasion you have or will visit Australia you make arrangements to stay at your spouse’s residence.

Your spouse owns, occupies, maintains and has sole control of access to that residence.

You financially support your spouse although you do not financially support your adult children. The relationship between you and your spouse has always been such that your spouse took care of children and now grandchildren while you are the significant earner of income. Due to the unpaid care that your spouse has provided to your children and grandchildren, the relationship is such that you financially support your spouse.

When you have visited Australia for business purposes, your employer arranges for you to stay at a hotel.

Your spouse visits Country C infrequently.

Your spouse does not intend to relocate to Country C or elsewhere before 20xx. It is anticipated by you that your spouse may relocate to Country C upon you retiring from full time employment.

You are not a member of any sporting associations or clubs in Australia.

You and your spouse are not eligible to contribute to the PSS or the CSS and are not and have not been a Commonwealth Government employee.

Time spent in Australia, and other countries

For the income year ended 30 June 20xx, you were in Australia for a total of less than 80 days, and in Country B for a total of 1xx days and Country C for a total of xx days, and in other countries for a total of xx days.

From the purposes of this ruling request, from 20xx (being the commencement date of the Application Period) to 30 June 20xx, you were in Australia for a total of less than 20 days, and in Country B for a total of 1xx days and in Country C for a total of xx days, and in other countries for a total of xx days.

During the 20xx income year, you were in Country C for a total of 2xx days, in Australia for a total of less than 40 days and in other countries for a total of xx days.

From 1 July 20xx to August 20xx, you have spent a total of 1 day in Australia, 1 day in Country B and a total of xx days in Country C.

Lodgement history

For the 20xx income yew, you will lodge income tax returns in Australia, Country B and C.

For the 20xx income year, you will lodge income tax returns in Country B, C and in Australia. You will lodge a personal income tax return in Country B as under your employment contract, your bonus is paid in foreign currency. You will lodge an income tax return in Australia in respect of the rental income derived from the two investment properties (you did not earn any other Australian sourced income that requires lodgement of an Australian tax return).

For the 20xx income year, you will lodge income tax returns in Country C and Australia. You will lodge an income tax return in Australia in respect of rental income derived from the two investment properties.

You have already lodged your 20xx and 20xx tax returns in Country B.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

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

Reasons for decision

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, from 20xx, your intention was to reside in Country B for an indefinite period; your employment commenced and you moved to Country B permanently. Subsequently from 20xx, your intention changed to intending to reside in Country C by your acceptance of the Executive in that country for the period of 3 years or such further time as agreed with your employer. You intend to never return to work in Australia and you will remain employed and living overseas for the foreseeable future.

You were granted work visas in Country B and C; your Country B visa was cancelled after moving to Country C and is valid for 2 years.

You intend to apply for a permanent residency visa in Country C when you become eligible. The visa will allow you to work in Country C without employer sponsorship.

Your spouse and children do not accompany you to overseas; your relationship with your spouse is such that on each occasion you have or will visit Australia you make arrangements to stay at your spouse’s residence, which owned, occupied, maintained by your spouse. From 20xx until the present time, you have only been physically present in Australia for less than 60 days and have not intended to live in Australia and have maintained strong employment ties with Employer X and its subsidiaries in Country B and C.

Based on the facts provided, 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.

In your case, your domicile of origin is Australia and there is no evidence to suggest that you will establish a new domicile in Country B or C. Therefore, 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 are not a resident of Australia for taxation purposes under this test.

The 183-day test

Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

You are not a resident of Australia for taxation purposes under this test as you will not be in Australia for 183 days or more while you are based in Country C.

Superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they or their spouse currently contribute to certain superannuation funds for Commonwealth government employees.

Based on the information you have provided, you are not a resident of Australia for taxation purposes under this test

Conclusion – your residency status

Based on the facts you have provided, you are not a resident of Australia for taxation purposes.

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