Edited version of your private ruling

Authorisation Number: 1012514239055

Ruling

Subject: Residency

Question and answer:

Will you be a resident of Australia for taxation purposes when you are working in country A?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You were born overseas and you are a citizen of another overseas country and Australia.

You are going to country A to work.

Your spouse will accompany you to country A.

You will enter country A on a visa on a couple of months duration. After that, you will have a work visa to work in country A.

You intend on being in country A for a couple of years.

You will live in hotel accommodation serviced style apartments initially in country A.

You will rent your home out in Australia storing your belongings in one of the bedrooms until you return to Australia on short term leases.

You do not intend on leaving Australia on a permanent basis.

You may return to Australia for short visits when you have holidays.

You have some assets overseas.

You have a super fund in Australia along with real estate.

You do not have any assets in country A.

You will vote in the election before leaving Australia.

You have not notified your bank, Medicare or health fund that you are leaving Australia as you don't believe you are a non-resident.

You have no dependants.

Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision

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 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 Income Tax: Residency - permanent place of abode outside Australia (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 a resident of Australia for tax 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 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:

· Physical presence in Australia

· Nationality

· Habits and "mode of life"

· Frequency, regularity and duration of visits to Australia

· Purpose of visits to or absences from Australia

· Family and business ties to different countries

· 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 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.

Physical presence in Australia

A person does not necessarily cease to be a resident because he or she is physically absent from Australia.

In relation to this the AAT has stated that:

Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.

You and your spouse are going to country A for a couple of years to work.

You intend on returning to Australia at the end of your work commitments in country A.

You will rent your home out on short term leases in Australia and store your belongings in the home.

Although you will not be physically present in Australia for the period you have a place in Australia that you can return to and that you consider your home.

Nationality

The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case.

You were born overseas, and you are a citizen of both another overseas country and Australia.

Habits and "mode of life"

The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia.

You are going to country A to work. You intend on returning to Australia at the end of your work in country A.

You do not intend on staying in country A on a permanent basis.

You will not purchase any properties in country A and will live in hotel style accommodation which is consistent with a person not taking up permanent residency.

You have a home in Australia which you will return to.

Frequency, regularity and duration of visits to Australia

Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country.

Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia.

You may visit Australia for short periods during holidays.

Purpose of visits to or absences from Australia

You will go to country A to work for a couple of years. You will return to Australia at the end of this period.

Family and business ties to Australia and the overseas country or countries

Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident.

Family: your spouse will accompany you to country A

Business: You will be employed in country A while you are there.

Maintenance of Place of abode

The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer.

You will rent your home out on short term leases for the period you are in country A.

You will return to this home when you come back to Australia.

Summary

As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

There are several factors outlined above which indicate that you have not ceased to be a resident of Australia. Specifically;

· you will go to country A for a couple of years to work.

· you will have a work visa for country A.

· you will rent your home out in Australia on short term leases for the period you are overseas.

· you will stay in hotel style accommodation and serviced apartments initially in country A.

Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the relevant period.

ATO view documents

Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.