Edited version of private advice

Authorisation Number: 1051531629656

Date of advice: 10 July 2019

Ruling

Subject: Residency status

Question 1

Did you cease to reside in Australia under the ordinary concepts test upon your departure from Australia in mid 20XX or at any other time?

Answer

Yes

Question 2

Did you establish a domicile of choice in Country A or elsewhere upon your departure from Australia in mid 20XX or at any other date?

Answer

No

Question 3

If your domicile of choice did not change for any period in which you were overseas; did you have a permanent place of abode outside of Australia?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

The scheme commences on

1 July 2012

Relevant facts and circumstances

You were born in Country I.

You are an Australian citizen and travel on an Australian passport.

You have not applied for any residency status or any other type of visa which would allow you to stay/visit or become a permanent resident of Country A or any other country.

You utilise the ability to apply for short-stay visas for periods less than 90 days in conjunction with your Seaman's Discharge Book to remain within Country A and other countries.

You utilise your Australian driver's license whilst overseas.

On occasions your sibling would accompany you when travelling home to Australia to visit your family and friends.

You ticked your immigration card as a resident when visiting Australia.

You hold an Australian credit card; after a period of five years it was only used in emergencies when Country A credit card failed.

You obtained a Country A credit card and Country A bank account after an extended period of time.

Your salary and wages were paid into an account held with a Bank based in Country I but located in Country Z.

You have no assets or personal possessions in Australia.

You have not lodged an Australian Tax Return since departure on the basis that you thought you were a non-resident.

You did not lodge any tax returns with any jurisdiction for a number of financial years.

You lodged a Tax return for Country A after a number of years and have subsequently lodged sequential returns for Country A.

In your Declaration of Income you declared your address as being an address in Australia.

No Tax has been withheld by your employers.

For an extended period you had your mail delivered to the respective vessels via management companies and vessel agents. In recent periods your mail was delivered to the address of the respective apartments.

You departed Australia for Country A. You did not have plans to return to Australia for the foreseeable future.

You were employed and lived fulltime on Vessel A greater than two years, the vessel cruised the world (Zone A, Zone B and Zone C) it did not visit Australia. Your accommodation on-board was shared use room/cabin that had locked cabinets for personal items. At all times access was limited to yourself and your roommate.

You were issued with a Country B Seaman's Discharge Book.

You visited Australia numerous times during break periods due to employment contracts ending, for holidays and to meet visa requirements for the relevant periods of this ruling.

You ceased employment on Vessel A.

You travelled to Country C and Country D for six months on unpaid leave to take time off (including several periods in Australia). You were accompanied by your sibling.

You re-commenced employment on Vessel A as contracted.

You commenced employment on Vessel B. Vessel B did not have a home port designated, it cruised Zone A (Country A, Country E and Country F). Your accommodation on-board was a shared cabin/room.

You first sought accommodation off vessel at Address A to allow you to stay with a friend you had at the time. You did not have a rental agreement, an acquaintance from a port authority allowed you to share a sparsely furnished apartment with others. You purchased personal possessions such as linen, bedside lamps, shower curtains, pot plants and kitchenware. You undertook maintenance jobs replacing the water heater and painting one of the bedrooms. On leaving the property your personal possessions were stored at the home of your sibling's partner's house.

You spent about five weekends during a period at Address A achieved by travelling by train from City A to City B.

For a few days you stayed in Address A as you were in port in City B.

You completed a course in Country G.

You advised the government Ministry of your savings account details in Australia.

You ceased employment on Vessel B.

For less than seven months you shared a furnished apartment at Address B with your sibling and their partner. Your name was not on the lease.

For about a four month period you were living in Address B due to Vessel B being in City B, City C and City D. There were a couple of trips to sea in this period. And when you were in City D it was longer to travel (X hour flight or X hours by car) you usually stayed for long weekends and worked during the week. Review of for Country A's calendar shows about 5 public holidays in the period.

For a similar time period you completed a qualification in Country A

Your sibling leased an unfurnished apartment at Address C for a five month period. You were not on the lease; your sibling and their partner were the lessees. You purchased furniture for the unit with your sibling.

For about a month you were employed on Vessel C whose home port was City B

You were unemployed for about month and shared accommodation at Address C prior to being employed on Vessel D.

For a short period you were employed on Vessel D which did not have a designated home port. It cruised the Zone A (Country A, Country E and Country F).

You stayed at Address C on weekends only for a period.

You stayed on occasion in City E, staying in accommodation belonging to a friend at Address D for about a month.

You spent a short time in your partner's apartment in City O in Country A whilst waiting for new job to commence.

Your signed contract for Vessel E, states your normal place of work and accommodation will be on board the Vessel. It also specifies that "You will not invite or bring guests on board the Vessel unless expressly authorised by the Captain."

You commenced employment on Vessel E which cruised Zone A.

Over a year period the following information has been established:

·  ATO research indicates Vessel E was situated at Country A located ports for a minimal period representing about ten percent of the twelve month period; the greatest number of consecutive days in Country A port was less than 10 days.

·  you advised your time off boat on a number of occasions which allowed leave to be taken on a continent and returning home to Australia.

·  you advised the time spent in Country A at City E was limited to an odd weekend when you could. Due to Vessel E's itinerary you were not there often. After about nine months you moved all your belongings onto Vessel E.

After more than six years you removed yourself from the Australian Electoral Role and cancelled your Medicare Card.

Your Seaman's discharge book shows you joined and departed vessels at the relevant city/country several times during your contracts as required by your employer for dedicated periods of time.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5 of

Income Tax Assessment Act 1997 Subsection 6-5(3)

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 (subsection 6-5(3) 0f the ITAA 1997).

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 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia. These tests are:

1. the resides test
2. the domicile test
3. the 183 day test
4. the superannuation test

The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides.

However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

1. The resides test

The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

In your case, you have been employed on international vessels operating in international waters and the national waters of other countries for a considerable period of time.

Therefore, you are not an Australian resident under the resides test.

2. 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 of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

The concept of Domicile was discussed in the Marriage of Emson (1980) 5 Fam LR 662:

A person may abandon his domicile of origin and acquire a domicile of choice but in order to establish a change of domicile there must be clear evidence of an intention to abandon the domicile of origin and to make a new permanent home in the country to which the person has removed. In my view a person cannot be said to acquire a new domicile until there has been a firm intention of establishing a permanent residence in another country and also the confirmation of that intention by actual residence in that country.

Declarations as to intention are rightly regarded in determining the question of a change of domicile, but they must be examined by considering the person to whom, the purposes for which, and the circumstances in which they are made and they must further be fortified and carried into effect by conduct and action consistent with the declared expression:

Ross v Ross [1930] AC 1 at 6-7 per Lord Buckmaster... Where the court finds that at a relevant point of time there is a conflict between the actual conduct of the party concerned and the verbal expression of his intention doubtless the court will in most cases prefer the act to the word - as an ancient proverb puts it: "what you do speaks so loudly that I cannot hear what you say

Further, in Fremlin v Fremlin (1913) 16 CLR 212; [1913] HCA 25 (Fremlin v Fremlin) Per Barton J:

In Winans v. Attorney-General, Lord Halsbury L.C. said:-"Now the law is plain, that where a domicil of origin is proved it lies upon the person who asserts a change of domicil to establish it, and it is necessary to prove that the person who is alleged to have changed his domicil had a fixed and determined purpose to make the place of his new domicil his permanent home." In the much older case of Udny v. Udny Lord Westbury said:-"Domicil of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. This is a description of the circumstances which create or constitute a domicil, and not a definition of the term. There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation. It is true that residence originally temporary, or intended for a limited period, may afterwards become general and unlimited, and in such a case so soon as the change of purpose, or animus manendi, can be inferred the fact of domicil is established." Lord Curriehill in the case of Donaldson v. M'Clure says:-"To abandon one domicil for another means something far more than a mere change of residence. It imports an intention not only to relinquish those peculiar rights, privileges and immunities which the law and constitution of the domicil confer on the denizens of the country in their domestic relations, in their business transactions, in their political and municipal status, and in the daily affairs of common life, but also the laws by which the succession to property is regulated after death. The abandonment or change of a domicil is therefore a proceeding of a very serious nature, and an intention to make such an abandonment requires to be proved by satisfactory evidence." Lord Halsbury, in Marchioness of Huntly v. Gaskell, expressed strong approval of Lord Curriehill's judgment, quoting this passage.

In your case, whilst you state that upon departing Australia you did not have plans to return to Australia for the foreseeable future, the facts provided do not show that you have been active in changing your place of domicile. A number of years have passed; to remain in Country A you are still utilising short-term visa applications in combination with your Seaman's Discharge book. You have not applied to change your residency status or to be the recipient any other type of visa which would allow you to stay/visit or become a permanent resident of Country A or any other country. You have through your inaction maintained Australia as your domicile of choice.

You worked and lived on vessels that spent most of their time traversing various seas. Your presence in Country A and other countries was dictated by your employment on vessels that were based sometimes in Country A and sailed between countries and also spent time in International waters. Your signed contract stipulates your normal place of work and accommodation will be on board the Vessel. You are restricted to invite guests to your accommodation unless expressly authorised by the Captain.

As such, your location and presence has been 'prescribed or dictated by any external necessity, such as the duties of office', as per Fremlin v Fremlin.

During the winter periods relevant to this ruling you utilised your ability to travel and take leave, you have indicated there were periods of absence from Country A, to other locations/countries before permanently relocating onto Vessel E.

While you would generally spend the intervening periods in winter residing on land in your supplementary accommodation in City B, your cabin was always available to you when wanted and outside of winter you would generally reside on the vessel while it cruised and often while it was berthed. There were also periods where you had the ability to access three residences.

Further, when you did stay in your supplementary accommodation onshore in Country A these stays were all temporary and to enable you to share accommodation with people who could not share your accommodation on the vessels you crewed. As stated in Fremlin v Fremlin 'it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation'.

Ellwood v FC of T [2012] AATA 869 considered factors against retention of a domicile include having not chosen a town, region or island to determine a new domicile of choice. One again, your chosen employment has dictated where, when and how you are located within the world.

Consequently, none of your stays off vessel have demonstrated an intention for an indefinite stay.

There is no evidence that you have made your home indefinitely outside Australia and you have retained your Australian domicile.

Permanent place of abode

The expression permanent 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 persons 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 the person intends to live for the rest of his or her life. It should be contrasted with a temporary or transitory place of abode outside of Australia.

Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) outlines some of the factors considered relevant in determining a person's place of abode. These are summarised at paragraph 23 in the ruling as:

·  the intended and actual length of the individuals stay in the overseas country (a period of two years or more in a country would generally be regarded as a substantial period)

·  any intention either to return to Australia at some definite point in time or to travel to another country

·  the establishment of a home outside of Australia

·  the abandonment of any residence of place of abode the individual may have had in Australia

·  the duration and continuity of the individuals presence in the overseas country, and

·  the durability of association that the individual has with a particular place in Australia.

Although you have been overseas for a significant period of time, you have not established a permanent home outside Australia as your accommodation while being employed on the vessel is of a transitory or temporary nature.

Your supplementary accommodation onshore has been as a tenant at residences in Country A with your partner and sibling; these have been facilitated with and without rental agreements. The properties through third parties have been both furnished and unfurnished for limited periods. Your ability to stay at these properties was temporary and transitory as your presence at these properties was limited by the requirements of your job to be present on board when sailing or when dictated by your employer. In addition you were required to adhere to the restrictions implemented by your choice of utilising short-term visas which only facilitated your presence in Country A for a limited period of less than 90 days.

Whilst you stated that you intended to establish a home indefinitely in Country A. Your actions have not supported this statement; from the initial departure date a significant period of time has elapsed. You have not taken any action to become a permanent resident of Country A. You have actively utilised short-term visas to facilitate your presence in Country A and other countries. Further, during the multiple return trips to Australia you ticked you were an Australian resident on your inbound immigration card.

While you did have permission to stay on the vessels you crewed, the accommodation was shared with other crew. You did not have the freedom to treat that accommodation as your own there were restrictions on your use of the accommodation. In particular you did not control where the vessel was either berthed or travelling. You could not invite guest on-board unless approved by the Captain. You could not decide in which country the vessel was at any time nor when it left that country and moved to another or traversed International waters.

It cannot be said that any of the vessels on which you worked and were provided accommodation were permanent places of abode, especially as they moved from Country to Country outside of your control.

As your domicile is in Australia and you have not established a permanent place of abode outside Australia, you are a resident of Australia for tax purposes under the domicile test.

3. 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.

In your case, as you were not physically present in Australia for more than 183 days in any year of income you are not a resident of Australia under this test.

4. The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Commonwealth Superannuation Scheme (CSS) or the Public Service Superannuation Scheme (PSS), or that person is the spouse or child under 16 of such a person.

In your case, you are not a member of the CSS or the PSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not treated as a resident under this test.

Your residency status

You are a resident of Australia for taxation purposes under the domicile test.

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