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Ruling

Subject: Residency

Question:

Are you a resident of Australia for tax purposes?

Answer:

Yes.

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

The scheme commenced on

1 July 2010

Relevant facts

You are a citizen of Australia and Australia is your country of origin.

You depart Australia in xxx.

You are travelling to country A.

You intend spending 1 year in an area of country A travelling overland then flying to Europe and spending the remaining time travelling back to Australia.

Your intention in regard to residency is to return to Australia permanently in a later year.

You will return to Australia occasionally to visit family and friends.

While in country A you will be basing yourself at your parents' house. You will stay there for short period from the date you arrive then will live there for a few days per month for less than a year.

You may apply for country A citizenship as you are now eligible.

You will travel from the country A to Europe where you will tour around. You are not sure which countries you will be in or where you will stay, but will generally be sailing in a yacht.

You will be making your way home to Australia.

Your assets in country A include transferred funds to fund the purchase of the yacht, travel expenses, and possibly some country A shares and/or an investment property.

In Australia your spouse owns an apartment which you have not lived in for the last couple of years. You have lived with relatives during this time.

The apartment is rented out, but you hope to return to live in the apartment when you return to Australia. You would be able to return to live with your spouse's parents at short notice if necessary.

Your assets in Australia include a small amount of cash in the bank.

You do not have an employment contract, but may do some short term work if the opportunity arises.

Your spouse is accompanying you on the trip.

Your social and sporting connections in Australia include an extended family network and a support network of friends.

Your social and sporting connections in country A include immediate family who live in country A.

Your spouse was a Commonwealth government of Australia employee for a short time.

You and your spouse do not hold a position with the Commonwealth Government of Australia.

You are over 16 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1936 subsection 6(1)

International Tax Agreements Act 1953 schedule 5

Reasons for decision

Residency 

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) and section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:  

· the resides test

· the domicile test

· the 183 day test

· the superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650.

 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. 

The resides test 

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. 

We consider you will not be residing in Australia as evidenced by:

· Staying with your parents in country A as a home base while you holiday in country A

· you do not intend returning to Australia permanently until a later income year

· you intend to sail around Europe and the Americas before sailing back to Australia.

· your spouse has accompanied you, and

· your spouse's apartment in Australia has been rented out until you return.

As you are not residing in Australia you will not be a resident of Australia under this test.

The domicile test 

If a person is considered to have their domicile in Australia they will be considered an Australian resident 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'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. You have not applied for country A citizenship although you may at some time in the future.

You are an Australian citizen. Your spouse's assets will remain here and you have strong social and family connections here, therefore, we consider your domicile is unchanged.

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 are going to country A with the intention of making it your base for further travel. You will stay with family there. Then you will sail around Europe and the Americas before sailing back to Australia.

In your case the Commissioner is not satisfied that you will have a permanent place of abode outside Australia. So you are a resident under this test 

The 183-day test

 Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, that is 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia.

This test does not apply to as you will not be in Australia for over 183 days in any year during your absence.

The superannuation test

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

 You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

 Your residency status 

You are a resident of Australia under the domicile test.