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This edited version has been archived due to the length of time since original publication.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: 1051335748983

Date of advice: 7 February 2018

Ruling

Subject: Residency

Question

Are you are resident of Australia for income tax purposes?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2017

Year ending 30 June 2018

Year ending 30 June 2019

Year ending 30 June 2020

The scheme commences on:

7 July 2016

Relevant facts and circumstances

You were born in Country Y.

You are a citizen of Australia.

You and your family left Australia in the 2016 income year with the intention on not returning to Australia on a permanent basis.

You and your family initially went on a holiday and then went to Country Z to live and work.

You arrived in Country Z in the 2017 income year.

Your spouse finalised their employment contract with their employer in Country Z in the 2017 income year.

Your spouse commenced their employment in Country Z a few weeks later.

Your spouse’s initial contract was for six months while the company was being established and their second contract was for 12 months which is renewed annually and they intend on renewing the contract each year.

You initially entered country Z on a tourist visa.

You will apply for a work visa once you have obtained all relevant documentation.

You and your family rent accommodation in Country Z.

You intend on purchasing a property once you are legally able to do so in Country Z.

You took small electrical and personal items with you to Country Z.

Your children are enrolled in school in Country Z.

You have taken out health insurance in Country Z.

You have purchased a car in country Z and have insurance on the car.

You have rented out your family home in Australia.

You have rental properties and bank accounts in Australia.

You and your family have not returned to Australia since leaving and have no intention to return in the near future.

You teach a sport and do charity work in country Z.

Neither you nor your spouse is 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.

Section 995-1 of the Income tax Assessment Act 1997 (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:

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

Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency.

Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

ATO view documents

Taxation Ruling TR 98/17 – Income tax: residency status of individuals entering Australia

Taxation Ruling IT 2650 – Income tax: residency – permanent place of abode outside Australia

Taxation Ruling IT 2650A (Addendum) – Income tax: residency – permanent place of abode outside Australia

Other references (Non ATO view – example court cases, etc):

Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01

Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014)

Federal Commissioner of Taxation v Miller [1946] HCA 23; (1946) 73 CLR 93.

Levene v Inland Revenue Commissioners [1928] UKHL 1; [1928] AC 217.

Applegate v Federal Commissioner of Taxation [1978] 1 NSWLR 126

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