Edited version of your private ruling

Authorisation Number: 1012593836492

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes for the period you are in Country Z?

Answer

Yes.

This ruling applies for the following periods

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commences on

1 July 2012

Relevant facts and circumstances

You were born in Australia and you are a citizen of Australia.

You left Australia to work in Country Z a number of years ago.

You initially had a xx month contract and have extended the contract for another xx months.

You live in rented accommodation in Country Z which is furnished.

Your partner has accompanied you to Country Z.

You have a highly skilled migrant visa and resident permit for Country Z.

Both the visa and permit only allow you to be in Country Z for the duration of your employment.

You have a bank account and credit card in Australia.

You have a bank account in Country Z.

You do not have a home in Australia and you were renting prior to going to Country Z.

Prior to going to Country Z you lived and worked in Australia.

You intend on returning to Australia for a holiday.

You intend on returning to Australia.

Neither you nor your spouse are or have been employed by the Commonwealth.

You are over 16 years of age.

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' and 'permanent place of abode' test;

· the 183 day test; and

· the Commonwealth superannuation fund 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 test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.

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'.

In considering the definition of 'reside', the High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word 'reside'.

The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant:

(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 with Australia compared to the foreign country concerned; and

(viii) maintenance of a place of abode.

The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In Shand v Federal Commissioner of Taxation 2003 ATC 2080, the Tribunal stated (at 35):

Questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms.

To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances.

(i) Physical presence in Australia
It is important to note that a person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Joachim v Federal Commissioner of Taxation 2002 ATC 2088, the Tribunal stated (at 2090):

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.

Further, in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA, the Tribunal stated (at 62):

Physical presence in a country for some period during a particular year of income is usually considered by the courts as necessary in order that a person should be resident in that country during that particular income year. However, there have been exceptions to this: Rogers v Inland Revenue Commissioners (1879) 1 TC 225 and Slater v Commissioner of Taxation (NZ) (1949) 9 ATD 1.

You have gone to Country Z for work purposes.

You intend on returning to Australia for a holiday.

Although you will not be physically present here while you are working in Country Z, this does not preclude you from being an Australian resident as no one single factor is necessarily decisive, as mentioned above.

(ii) Nationality
You were born in Australia and you are a citizen of Australia.

(iii) History of residence and movements
You lived and worked in Australia prior to taking up the work contract in Country Z.

(iv) Habits and 'mode of life'
You have gone to Country Z for work purposes.

You intend on working in Country Z for a few more years.

You have a highly skill migrant visa and a resident permit which has been granted for the duration you are employed in Country Z.

You rent accommodation in Country Z.

Your partner has accompanied you to Country Z.

It is considered that you still have a continuing association with Australia which is consistent with someone who is still residing in Australia.

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

You intend on returning to Australia for a holiday.

(vi) Purpose of visits to and absence from Australia

The purpose of your absence from Australia is to work in Country Z, subject to future visa approvals and extensions.

(vii) Family, business and financial ties

Family

Your partner has accompanied you to Country Z.

Business or economic

As mentioned above, you have taken up an employment contract in Country Z.

Assets

You have no significant assets in Australia.

You do not have any assets in Country Z.

(ix) Maintenance of a place of abode in Australia

(x) You are not maintaining a home in Australia for the period you are working in Country Z.

Summary of the resides test

As mentioned above, the weight given to each factor varies with individual circumstances, no single factor is necessarily decisive and the term 'reside' should be given a wide meaning.

In your case, although you intend to be physically absent from Australia, there are various factors that indicate that you have not ceased to be a resident of Australia. These are primarily:

· you have a restrictive visa whereby your ability to live in Country Z is dependent on your continuing employment;

· you are an Australian citizen;

· your partner has accompanied you to Country Z; and

· You intend on returning to Australia to live.

Based on the above, you will retain a continuity of association with Australia while you are overseas and will be residing in Australia according to the ordinary meaning of the word.

Therefore, you are a resident of Australia under the 'resides' test of residency.

Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument.

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 to prove an intention to make his or her home indefinitely in that country.

Your domicile of origin is Australia.

A domicile of choice is adopted when you become a citizen of a new country or apply for permanent residency in a new country.

You have not indicated that you have changed or are going to change your domicile. Your resident permit and visa do not allow you to remain in Country Z beyond your work contract.

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.

The Commissioner is not satisfied that you have set up a permanent place of abode outside Australia for the following reasons:

· Your visa and resident permit only allows you to be in Country Z for the duration of your employment.

· You intend on returning to Australia to live.

Your accommodation, and your overall presence in Country Z is entirely contingent on your ongoing employment, it is considered that your place of abode is temporary in nature and could not be considered to be a permanent place of abode.

You are a resident under this test.

As you meet the resides and domicile tests of residency, you are a resident of Australia for tax purposes for the income tax years ending 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016.