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This edited version has been archived due to the length of time since original publication.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: 1051336180938

Date of advice: 8 February 2018

Ruling

Subject: International pensions

Question

Were you a resident of Australia for taxation purposes for the period XX May XXX to X July XXXX?

Answer

Yes

Question

Were you a resident of Australia for taxation purposes from X July XXXX to XX December XXXX?

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 commenced on:

DDMMYY

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You are not a permanent resident of any other country.

You went to Country Y in the 2016 income year for work purposes.

Your employment contract in Country Y was for two years with the possibility of extending the contract.

Your intention was to be in Country Y for the duration of your employment contract.

You had a business and residential visa for Country Y which allowed you to be in Country Y for the duration of your employment.

You took personal items to Country Y with you.

You stayed in rented accommodation which was fully furnished and paid for by your employer in Country Y.

You purchased a vehicle in Country Y.

Your spouse and children joined you in Country Y in the 2017 income year.

Your children attended school in Country Y.

You left your home in Australia vacant while you were in Country Y.

You returned to Australia for two weeks at Christmas in December 2016.

You returned to Australia for medical treatment 2018 income year.

You stayed in your vacant home in Australia or with your family during your visits back to Australia.

You were advised in the middle of the 2017 income year that your employment was being terminated.

You and your family returned to Australia shortly after your employment was terminated.

Neither you nor your spouse are eligible to contribute to the relevant 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 Y for work purposes in the 2016 income year.

Your spouse and children joined you in Country Y in the 2017 income year.

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.

Based on the facts above you were residing in Australia according to ordinary concepts for the period XX may XXXX to X July XXXX as you retained a continuity of association with Australia as your spouse and children remained in Australia in the family home until X July XXXX at which point they left Australia to join you in Country Y.

You were a resident of Australia for taxation purposes for the period XX may XXXX to X July XXXX.

From X July XXXX until you returned to Australia on XX December XXXX you were not a resident of Australia for taxation purposes as your continuity of association with Australia was such that you no longer were a resident for taxation purposes.

When you returned to Australia after the termination of your employment in Country Y you resumed your residency status for taxation purposes in Australia.

The domicile test

If a person’s domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able 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.

Your domicile of origin is Australia.

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

You were not a resident under this test from X July XXXX to XX December XXXX.

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 were not in Australia for more than 183 days for the period you were in Country Y.

You are not a resident under this test for the period X July XXXX to XX December XXXX.

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 were not a resident under this test.

Your residency status

You were a resident of Australia for taxation purposes from XX may XXXX to X July XXXX.

You are not a resident of Australia for taxation purposes from X July XXXX to XX December XXXX.

You resumed your residency status when you returned to Australia when your employment in Country Y was terminated.

ATO view documents

Taxation Ruling TR 98/17

Taxation Ruling IT 2650

Does Part IVA or any other anti-avoidance provision apply to this ruling?

The application of Part IVA of the ITAA 1936 has not been considered as this topic is in the SBIT low risk PART IVA list as specified in ORCLA.

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