Edited version of your private ruling

Authorisation Number: 1012516792679

Ruling

Subject: Residency status

You were born in country Z.

You are a citizen of Australia and country Z.

You have a spouse and one dependant.

You and your family moved to Australia and you became an Australian citizen.

After a period, you and your family left Australia and moved to country S where you remained for an extended period, before moving back to the country Z.

After a period you gained employment in country T.

Due to the limited employment opportunities for your now adult child in country Z, you and your family returned to Australia.

In you and your spouse's case you moved to Australia to help your child settle in Australia.

Since arriving in Australia you have been unemployed with the only income that you have received being unemployment benefits.

You have applied for an employment opportunity to return to country T.

The position that you are applying for is with a private country N company.

The company is bidding on a country N Agency for the International Development (country N AID) grant to provide aid to the Government of Country T.

Your appointment is contingent on:

· the company winning the bid and being selected; and

· your application being successful.

Contingent on the above, you will depart Australia shortly upon hearing whether your application was successful.

You will arrive in country T on a work visa that allows you to stay in country T as long as you are employed.

The employment position in country T is for a number of years.

If you are successful in being appointed to the position in country T your spouse and child will remain in Australia due to security issues and clauses in your employment contract.

While in country T you will live in secured shared housing provided by your employer as a condition of your employment contract.

If your application is successful, you will close all your Australian bank accounts prior to your departure and will advise the relevant authorities, including the Australian Electoral Office, Medicare etc, of your intention to depart Australia indefinitely.

You will to return to Australia every year for a short period to holiday and visit your spouse and child.

Both your spouse and child are currently employed in Australia and will continue to be so while you are engaged in you overseas employment.

You are currently living in rental accommodation in Australia.

Your spouse's employment income will be used pay for rental expenses in regards to the home you are currently occupying in Australia while you are employed in country T.

When you return to Australia you will stay with your spouse.

Your remuneration from your employment in country T will be paid in overseas currency and transferred to the country Z to pay the mortgage of your country Z home. A small amount maybe transferred to Australia to assist your spouse with medical expenses.

Your assets in Australia consist of a motor vehicle and bank accounts.

Your overseas assets consist of a home and bank accounts located in country Z.

Your home in the country Z is currently being rented out to tenants.

Your sporting and social ties in Australia consist of family and friends.

Your overseas sporting and social ties in consist of family and friends.

When you leave Australia you will state on your Australia Immigration outgoing passenger card that you are leaving for work purposes.

You have never been a Commonwealth of Australia Government employee.

Once you have completed your employment contract in country T you will return to the country Z permanently where you will retire.

Your spouse will also move to the country Z to join you in retirement.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1936 Subsection 6(1)

Residency

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. 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 NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia.

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 satisfy the conditions of one of the other three tests.

The resides test

In FC of T v Miller (1946) 73 CLR 93 at page 99-100 and Subrahmanyam v FC Of T [2002] AATA 1298; 2002 ATC 2303; (2002) 51 ATR 1173 at paragraph 43-44, it was determined that the word 'resides' should be given the widest meaning.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, identifies a number of factors which assist in determining the residency status of a taxpayer. Although Tax Ruling TR 98/17, discusses the Commissioners view on the residency status of individuals entering Australia, the same principles can be applied to determine whether individuals leaving Australia remained residents of Australia for income tax purposes.

According to paragraph 20 of TR 98/17 factors to be considered in determining residency in Australia are:

·  intention or purpose of presence;

·  family and business/employment ties;

· maintenance and location of assets; and

·  social and living arrangements.

Paragraph 21 of TR 98/17 further states that:

No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances.

Recent case law decisions have expanded on the list of factors identified in TR 98/17. Case 5/2013 and Sneddon v FC of T (Sneddons Case), for example, considered the following factors in relation to whether the taxpayer resided in Australia:

(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.  

Each of these factors will be considered in turn, with reference, where relevant, to recent Australian case law decisions in which the taxpayer was determined to be a resident of Australia in accordance with subsection 6(1).

Prior to considering these tests it must first be established whether you have re-established your residency status for tax purposes with Australia since your return to Australia.

From the information that you have provided it is considered the following is relevant. You, your spouse and your child have all returned to Australia for the purpose of securing your child long term employment provides. In the case of your spouse, they are currently employed fulltime and will continue to be so while you are employment in country T. Further your spouse will continue to rent the home that you are currently living in while you are overseas. Significantly you are currently in receipt of unemployment benefits paid by the Australian Government. Such payments are not paid to Australian non-residence taxpayers. In light of the above the commissioner is satisfied that you have re-established your residency ties with Australia.

Physical presence in Australia

A person does not necessarily cease to be a resident of a particular place just 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 (Joachim v Federal Commissioner of Taxation 2002 ATC 2088, at 2090).

In recent court cases taxpayers were found to be residents of Australia for income tax purposes even though they had only spent a minimal period in Australia.

In Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA 856 (Iyengar's case), it was indicated that there is a requirement that you at least be physically present in Australia for part of an income year. Further in this case it was considered that the taxpayer remained a resident of Australia for income tax purposes even though during the period he was working overseas (2 years and 7 months) he had only returned to Australia for a two week period and for a 10 day period.

In your case, if successful in gaining employment in country T you will return to Australia for a short annually to visit your spouse and child in Australia.

Consistent with the principles established in the Iyengar case, we consider that although you will only return to Australia for a short period annually this is sufficient for you to maintain continuity with Australia during the financial years included in this ruling.

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 a factor that is considered along with all of the circumstances of each case.

You are an Australian and country Z citizen and you have not indicated that you will seek citizenship in country T.

History of residence and movements

In Iyengar's case, the Tribunal noted that both past and subsequent history of a person's residence may be relevant in determining whether that person is ordinarily resident (for taxation purposes) in a country in a particular income year.

In your circumstances, you were born in country Z and lived there until you and your family moved to Australia. You then became an Australian citizen. A sort time later, you and your family moved to country S. After living and working in country S you and your family returned to country Z. After returning to the country Z you then went on to work in country T for a period. During this period, your family remained in country Z. After concluding your employment in country T you returned to Australian via the country Z.

Your purpose of returning to Australia was to aid your child to find long term employment in Australia, due to the limited employment opportunities in the country Z. Due to your limited employment opportunities in Australia you formed the intention of leaving Australia and returning to country T. If your application is successful, you will depart Australia shortly after and arrive in country T on an employer provided work visa that allows you to remain in country T for as long as you are employed.

As you will arrive in country T on an employer provided work visa your continued presence in country T will be dependant on your continued employment in that country.

Significant is the fact that you intend to leave Australia only due to limited employment opportunities. This adds significant weight to the conclusion that had this not been the case, you would remain in Australia. It can therefore be said that had it not been for the lack of employment opportunities in Australia, you would ordinarily continue to reside in Australia during the income years included in this ruling. Further your history of residence and movements and are consisted with where your family has resided, which during the period included in this ruling will be in Australia.

In light of the above and consistent with the principles established in Iyengar's case, your history of residence and movements will not be consistent with someone who is no longer residing in Australia.

(iv) Habits and "mode of life"

In both Snedden's case and 5/2013 both taxpayers were found to be residents of Australia for income tax purposes.

In Sneddons case the taxpayer was provided with a fully-furnished apartment leased by his employer.

Significantly in case 5/2013 the taxpayer, the taxpayer lived in a serviced apartment. The taxpayer's employment in Singapore was for a limited period and his visa to work in Singapore was conditional upon that employment. When working in both Singapore and India the taxpayer lived in fully-furnished quarters provided by his employers. On each occasion that the taxpayer returned to Australia, he lived with his wife and children at their family home in Australia.

Further the taxpayer's wife and two children did not accompany him to either Singapore or India but instead remained living in Australia at their family home at the relevant time. The taxpayer returned to Australia a number of times to visit his wife and two children and his wife and two children.

Your case is particularly simular to case 5/2013, whereby while working in country T you will live in employer provided secured shared housing as provided under the conditions of your employment contract. This housing is contingent upon your continued employment in country T. During the periods that you are not working, you will return to Australia to holiday your spouse and child for a short period annually. When you return to Australia you will stay in the family home that your spouse will continue to rent. Further due to security issues, neither your spouse nor child will accompany you while you are in country T.

Consistent with the findings in Snedden's case and particularly case 5/2013 and based on the above, we do not consider anything about your habits and mode of life during the financial years included in this ruling will be inconsistent with you being a resident of Australia for taxation purposes.

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

In Lysaght v Inland Revenue Commissioners (1928) 13 TC 511 the Court noted that mere fact that visits to a country are of short duration does not of itself exclude residence in that country.

During the income years included in this ruling you will return to Australia annually for a short period to visit your spouse and child.

When considering the issue of return visits to Australia by a taxpayer who was living and working overseas, the Tribunal in Iyengar's case also noted that the brevity of a visit to a particular country compared to length of time spent abroad does not of itself exclude an individual from being a resident in the country visited. Further, the taxpayer in Iyengar 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 and was also considered to a resident of Australia for income tax purposes.

Considering the above and the principles established in Iyengar's case, we do not consider the relatively short duration of your intended annual return trip to Australia is sufficient to preclude you from being considered a resident of Australia for taxation purposes in each of the income years included in this ruling.

(vi)  Purpose of visits to or absences from Australia

The details of your intended return trips to Australia during the financial years included in this ruling are discussed above. As stated, we do not consider the brevity of those trips precludes you from being considered a resident of Australia for taxation purposes. The fact that you intend to use this annual short break to visit family is a clear indication that you intend to continue to maintain a continuity of association with Australia during the years in question.

In considering the purpose of your absence from Australia, your circumstances indicate that your absence from Australia will be for the exclusively for the purpose of fulfilling your contractual obligations in country T. This is clearly indicated by the fact that once you have concluded your employment in country T you will leave permanently to retire in the country Z.

In light of the above, we consider that the purpose of your visits to Australia will be for the purpose of maintaining your continuity of association with Australia while your absences from Australia are specially for employment purposes. Therefore these actions are sufficient to preclude you from being considered a non resident of Australia for taxation purposes in each of the income years included in this ruling.

(vii) Family and business ties to Australia and the overseas country or countries

Family

You have a spouse and child who will continue to reside in Australia while are engaged in your employment in country T. In contrast you have no family that reside in country T.

It is significant that in the recent decisions regarding the residency status of persons working overseas, including Beizuidenhout, Case 5/2013, and Iyengar's case, the taxpayers had both family residing permanently in Australia. There is particular emphasis placed in these decisions on the taxpayers' Australian residence being the 'family home'.

The Macquarie Dictionary defines 'family' as:

· parents and their children, whether dwelling together or not.

· one's children collectively.

· any group of persons closely related by blood, as parents, children, uncles, aunts, and cousins.

Consistent with the findings in Case 5/2013 and Iyengar, and the definition of family provided by the Macquarie Dictionary the fact that your spouse and child will continue to reside in Australia indicates the strength of your family ties to Australia as opposed to any ties that you might have in country T. Further have you listed your purpose of returning to Australia was to visit your family.

Clearly your family ties are far stronger in Australia than they are in country T or the country Z.

Business or economic

While it is acknowledged that during the income years you will be employed in country T, where you will derive income, from the information that you have provided this is the only business or economic tie that you will have with country T.

You own a home in the country Z and have maintained a bank account to manage your rental receipts and expenses. In addition the income that you will derive in country T will be directed to your country Z bank account to assist in paying off the mortgage. In country T the only business or economic tie is your employment remuneration, while in Australia you do not have any business or economic ties.

From the information that you have provided your business or economic ties are stronger in country T then they are in Australia. However it should be noted that you remuneration from your employment in country T will be paid in country N dollars and banked into your country Z bank account.  

Assets

You do not have any assets of substance in either Australia and country T.

Maintenance of Place of abode

You are currently living in rental accommodation which will continue to be occupied by your spouse while you are employed in country T. Further when you return for 14 days annually you will stay with your spouse in the rental property. This pattern is consistent with someone who is maintaining a place of abode in Australia.

Conclusion

While it is acknowledged that you own a home in the country Z that you are paying a mortgage on, this home is currently being used as a rental property. Further you and your spouse are currently occupying a rental property in Australia, which will continue to be occupied by your spouse while you are employed in country T and you will return to during your periods of absence from country T. This is consistent with someone who is maintaining a place of abode in Australia.

With regards to the remaining factors, your circumstances are markedly similar to Sneddon's case, Iyengar's case and case 5/2013, all of whom were found to be residents of Australia for income tax purposes. Significantly, the emphasis given in these cases to the place where the taxpayer's 'family' resides, physical presence in Australia, family and business ties to Australia and habits and mode of life. Consistent with the findings in these cases, the actions and patterns that you intend to exhibit are not consistent with someone who has left Australia indefinitely. They are more consistent with someone whom while being employed overseas is maintaining a continuity of association with Australia.

Based on a consideration of all of the factors outlined above, it is concluded that you will continue to be a resident of Australia under the resides test for income tax purposes during the income years that are included in this ruling.

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'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. From the information that you have provided, although your country of origin is the country Z, you elected a new domicile of choice when you moved to Australia and became a citizen. After leaving Australia to live and work in the country S you then moved back to the country Z and re-established your domicile in country Z. However you returned to Australia with your family re-electing Australia as your domicile of choice. Therefore it is considered that have an Australian domicile for the period that you intend to be employed in country T.

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

Paragraph 23 of IT 2650 sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode:

a) the intended and actual length of the taxpayer's stay in the overseas country;

b) whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

c) whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

e) the duration and continuity of the taxpayer's presence in the overseas country; and

f) the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

In relation to the weight to be given to each of the above factors, paragraph 24 of IT 2650 states:

The weight to be given to each factor will vary with the individual circumstances of each particular case and no single factor will be decisive… however… greater weight should be given to factors (c), (e) and (f) than to the remaining factors, though these are still, of course, relevant.

Your circumstances will be the following should you be successful in applying for an employment position in country T:

· you will leave Australia to live and work in country T for a number of years;

· once you have completed your employment contract you will leave country T to retire in country Z;

· you will be employed by a country N private company working on an aid project in country T;

· you will arrive in country T on an employer provided visa that is conditional on your continued employment for your employer;

· you will live in employer provided secured shared housing;

· you will have no assets of significance in Australia or country T;

· you will return to Australia annually for a short period to visit your spouse and child in Australia;

· you will inform the relevant government authorities, that you are departing Australia indefinitely;

Based on these facts and the greater weight applied against factors (c), (e) and (f), your pattern of behaviour will not be consistent with someone establishing a permanent place of abode outside of Australia. Significant in reaching this conclusion is the fact that you will enter country T on an employer provided visa that is conditional on your continued employment and you will be living in employer provided secured shared housing, therefore it cannot be said that you will be establishing a home in country T. Further the fact that your spouse and child will remain in Australia to live and work for the duration of your employment adds weight to the fact that the durability of association that you have with Australia is far greater that it is with country T.

These facts give rise to the supposition that the durability and continuity of your presence in country T is contingent on your continued employment and not any desire that you have to stay in country T indefinitely.

Accordingly, as your Australian domicile will remain unchanged and the Commissioner is not satisfied that you will establish a permanent place of abode outside of Australia, you will continue to be a resident of Australia for income tax purposes in the years that are included in this ruling.

Conclusion

As it has been established that you will continue to be a resident of Australia for income tax purposes under both the resides test and the domicile test, there is no need to consider the remaining 2 tests. Therefore you will continue to be a resident of Australia for income tax purposes for the income years included in this ruling under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.