Edited version of your private ruling

Authorisation Number: 1012604036559

Ruling

Subject: Residency for tax purposes

Question and answer

Are you a resident of Australia for tax purposes?

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 were born in Australia and are a citizen of Australia.

You are employed by an Australian company based in Country X.

You commenced the overseas assignment in the 20XX income year.

The sole purpose of your travel to Country X is for work and you intend to return to Australia at the completion of your assignment.

Your employer provides you with accommodation in Country X.

Your employer pays superannuation guarantee contributions on your behalf to your superannuation fund.

You visit Australia at least four times per year for business and personal reasons.

While in Australia you stay at your home which is available for you and your family's permanent use and it is not rented out.

Your spouse has accompanied you to Country X as has one of your dependants. Your other dependant has remained in Australia to attend university.

Your spouse returns to Australia regularly for work purposes.

Your immediate and extended family reside in Australia.

You have retained social connections with Australia.

You have the following Australian assets:

• Primary residence

• Investment property

• Superannuation fund

• Bank accounts

• Motor vehicles

• Boat

You do not have any assets in Country X.

You have Australian private health insurance.

You are enrolled to vote in Australia.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 

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.

In your case, you have travelled to Country X for work purposes, you return to Australia regularly and have maintained a home in Australia. You intend to return to Australia permanently when your current employment assignment ends. You have maintained an association with Australia by way of retaining your family home and multiple other assets, your private health insurance and by remaining on the Australian electoral roll.

For these reasons, you are residing in Australia according to the ordinary meaning of the word 'reside', and therefore you are a resident of Australia for tax purposes under this test.

Your residency status

As you meet the resides test, you are a resident of Australia for tax purposes. It is not necessary to consider the remaining three tests of residency.

As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia.