Edited version of private advice

Authorisation Number: 1051713276515

Date of advice: 22 July 2020

Ruling

Subject: Residency

Question

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 ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ending 30 June 2021

Year ending 30 June 2022

Year ending 30 June 2023

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You were born in Australia.

You are an Australian citizen.

You departed Australia for country X in 20xx.

You first received your country X VISA in 20xx and it has since been renewed.

You intend to renew it again once the current VISA expires.

You are employed as a full-time employee by a company in country X.

You own the following assets in country X:

·        motor vehicle

·        furnishings for your abode

·        bank account

You have lived in the same property overseas since arriving in country X.

The property is available for your exclusive use throughout the year.

The lease agreement is in your name alone, you pay for the rent and all utility bills and are not reimbursed for any property expenses.

You have two properties in Australia.

You sold your Australian motor vehicle.

You sold majority of your household effects before departure. Your remaining personal items such as clothing were taken with you to country X.

You have children who are all independent age. They reside in Australia.

You have made several trips to Australia after first departing to visit family and friends.

When visiting Australia, you will stay with your family and friends.

Your spouse departed Australia to reside with you in the same year.

Your spouse left to temporarily return to Australia the following year whilst you remained in country X. The visit was to assist with caring for your spouse's family.

Your spouse then returned to country X to reside with you and continued to do so until departed country X to reside in Australia into the foreseeable future.

Your spouse has been working in Australia. Your spouse lives in a rental property.

You have no intention to return to Australia to live and that you intend to continue residing and working in country X.

You have removed your name from the Australian Electoral Commission.

You have removed your name from Medicare.

You don't have Australian private health insurance.

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.

You request that the ruling decision is prepared from the departure date onwards.

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:

·        the resides test,

·        the domicile (and permanent place of abode) test,

·        the 183 day test, and

·        the superannuation test.

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 several factors identified which can assist in determining if a 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:

(i)     physical presence in Australia

(ii)       nationality

(iii)      history of residence and movements

(iv)      habits and "mode of life"

(v)       frequency, regularity and duration of visits to Australia

(vi)      purpose of visits to or absences from Australia

(vii)    family and business ties to different countries

(viii)   maintenance of place of abode.

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, you moved to country X, you are employed as a full-time employee in country X, you enjoy the lifestyle and your employment role, your intention to indefinitely reside outside Australia was formed soon after arriving in country X and your current overseas employment contract has no end date which gives you added confidence that you will remain in country X well into the foreseeable future.

You have a long-term accommodation in country X for your exclusive use, you have been living in the same property since arriving. The lease agreement is in your name alone, you pay for the rent and all utility bills and are not reimbursed for any property expenses.

Your spouse departed Australia to join you in the same year, your spouse lived in country X to the following year where your spouse left to temporarily return to Australia whilst you remained in country X. The visit was to assist with caring for your spouse's family.

Your spouse returned to country X to reside with you and continued to do so until a year later. Your spouse departed country X to reside in Australia into the foreseeable future.

Although your spouse has relocated to Australia, you remain in country X. In these situations, the residency status of you and your family are looked at independently from each other. As such, you will still be residing in country X until you return to Australia permanently.

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 X. 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.

In your case, you have a long-term accommodation for your exclusive use, you have been living in the same property since arriving in country X. The lease agreement is in your name alone, you pay for the rent and all utility bills and are not reimbursed for any property expenses. You do not have a permanent home available to you in Australia.

The Commissioner is satisfied that you set up a permanent place of abode.

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 X.

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

You are not a resident of Australia for income tax purposes.

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