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This edited version has been archived due to the length of time since original publication.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: 1051339163526

Date of advice: 15 February 2018

Ruling

Subject: International - residency

Question

Are you a resident of Australia for taxation purposes?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2017

The scheme commences on:

1 July 2016

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You are not a citizen of any other country.

You are not a permanent resident of any other country.

You have been working for an overseas organisation as an independent contractor.

You commenced working for the overseas organisation in the 2017 income year in Country B and you left Country B a few months later and returned to Australia.

You departed Australia in early 2017 and went to Country C and Country D working for the overseas organisation and you returned to Australia in a couple of months later.

You went to Country C and Country E a few weeks after arriving in Australia and you worked for the overseas organisation and you returned to Australia early in the 2018 income year.

You have since left Australia to go to Country F.

You had a visa to enter Country B. This visa did not allow you to remain permanently in Country B.

You stayed in an apartment in Country B which was fully furnished and paid for by the overseas organisation.

You did not pay tax in Country B.

You had a visa to enter Country C. This visa did not allow you to remain in Country C permanently.

You stayed in an apartment in Country C which was fully furnished and paid for by the overseas organisation. You shared this accommodation with another colleague.

You did not pay tax in Country D.

You had a visa to enter Country D. This visa did not allow you to remain permanently in Country D.

You stayed in hotel and serviced apartments in Country D which was paid for by your overseas organisation.

You did not pay tax in Country D.

You had a visa to enter Country E. This visa did not allow you to remain permanently in Country E.

You stayed in a house leased by the overseas organisation which you shared with colleagues.

You did not pay tax in Country E.

You gave up your leased property in Australia when you went overseas.

You took personal items with you overseas and put the remainder into storage in Australia.

You stayed with family and friends when you returned to Australia.

You have a car in Australia which you use when you return to Australia.

You do not have any dependants.

Your family live in Australia.

You are not eligible to contribute to the relevant Commonwealth super 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 commenced working for the overseas organisation the 2017 income year in Country B and you left Country B a few months later and returned to Australia.

You departed Australia early in 2017 and went to Country C and country D working for the overseas organisation and you returned to Australia a few weeks later.

You went to Country C and Country D a few weeks after arriving back in Australia and you worked for the overseas organisation and you returned to Australia early in the 2018 income year.

None of the visas you had to enter Country B, Country C, D and Country E allowed you to remain permanently in the countries.

You lived in accommodation provided by the overseas organisation during each contract and you either had the sole use of the accommodation or shared it with colleagues.

When you returned to Australia you stayed with family and friends.

Based on the facts above you were a resident of Australia for taxation purposes under the resides test as you maintained a continuity of association with Australia while working overseas on the short term contracts.

You returned to Australia at the end of contracts and you stayed with family and friends.

You were a resident under this test for the 2017 income year.

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.

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.

You have not taken any steps to change your domicile.

The Commissioner is not satisfied that you had a permanent place of abode outside Australia in the 2017 income year for the following reasons:

You were a resident under this test in the 2017 income year.

Your residency status

You were a resident of Australia for the 2017 income year while undertaking short term contracts for the overseas organisation.

You are required to declare the income you derived while working in Country B, Country C, country D and Country E in your Australian tax return.

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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