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Edited version of your private ruling
Authorisation Number: 1012517548240
Ruling
Subject: Are you a resident of Australia for taxation purposes?
Question and answer
Are you a resident of Australia for taxation purposes?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
You were born in country A and you are a citizen of country A.
You are a permanent resident of Australia.
You went to country A for work purposes.
Your spouse and child have remained in Australia.
Your spouse is living in your rented family home.
You will return about once a year to see your family.
You intend on returning to Australia but you are unsure when.
You will live with extended family in country A.
You have no assets in country A.
You have assets in Australia.
You put on your out going passenger card that you were a resident of Australia.
Neither you nor your spouse are currently or have ever been Commonwealth Government employees.
Relevant legislative provisions:
Income Tax Assessment Act 1936 Section 6-1
Income Tax Assessment Act 1997 Section 995
Reasons for decision
Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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:
1. the resides test
2. the domicile test
3. the 183 day test
4. 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.
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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.
The resides test
The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'.
Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia focuses on the quality and character of an individual's behaviour while in Australia (which includes, in addition to family and business ties, factors such as intention or purpose of presence, social and living arrangements, and maintenance and location of assets), in conjunction with the period of physical presence in Australia.
Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.
In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period.
In your case, you have ties to both Australia and country A.
Although you have ties to country A, your ties to Australia are stronger because your spouse and child reside in Australia, and you intend to return to your family and home in Australia about once a year. The main purpose of your presence in Australia is to be with your family, whereas you are in country A for work. This indicates that you are residing in Australia according to the ordinary meaning of resides.
As you are residing in Australia, you are a resident of Australia under the resides test.
Your residency status
As you have passed the resides test, it is not necessary to consider whether you are a resident of Australia under any of the three remaining tests.
You are a resident of Australia for taxation purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.