Edited version of your written advice

Authorisation Number: 1012705828962

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 ended 30 June 2104.

The scheme commenced on:

1 July 2013.

Relevant facts and circumstances

You were born in Country X.

You are a citizen of Australia only.

You have not been granted permanent residency in any other country.

You were living in Australia prior to your departure to Country X in 2013.

Your visa is an employment visa and does not enable you to stay permanently in Country X.

The purpose of the overseas visit is employment.

You are employed by a Country X company.

Your long-term intention is to return to Australia, however, your tenure in Country X is indefinite.

You return to Australia to visit infrequently but have no definite plans to return permanently.

You do not hold a return airline ticket.

When in Country X, you stay in a hotel. This accommodation is provided to you by your employer.

Your only asset in Country X is your bank account.

Prior to departing Australia, you lived in your family home in Australia which you still own.

Your spouse continues to live in the family home in Australia. Your spouse does not accompany you to Country X due to the indefinite nature of your employment tenure.

Your assets in Australia include your family home, household effects and bank accounts.

Your Australian income is bank interest.

You do not have a position of employment being held for you in Australia.

You have no social or sporting connections in Australia or Country X.

Neither you, nor your spouse, have ever been Commonwealth government employees.

You have not had your name removed from the Australian electoral roll.

You have not advised any Australian banks that you are a foreign resident.

You have not advised Medicare or your private health insurer that you are not living in Australia.

You are not required to lodge a tax return in Country X. The revenue authority of Country X automatically assesses the tax due on the income.

You stated 'employment' as the reason for going overseas on your Australian Immigration outgoing passenger card.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Section 6-1.

Income Tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1997 Section 995.

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 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:

• the resides test

• the domicile test

• the 183 day test and

• the Commonwealth superannuation fund test.

The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides.  If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. A taxpayer only needs to be a resident of one of the tests in order to be a resident of Australia for tax purposes.

The resides 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:

(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, and

(viii) 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 Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia.

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

In your case, although you are physically absent from Australia, there are various factors that indicate that you are still a resident of Australia. These are primarily:

• you are a citizen of Australia

• you were born in Australia

• you stay in hotel accommodation provided by your employer in Country X

• Your visa is an employment pass that does not allow you to stay permanently in Australia

• Your spouse remains in your family home in Australia

From the facts you have provided, it appears that you have departed Australia for Country X for predominantly employment purposes and have retained a continuity of association with Australia consistent with residing in Australia according to the ordinary meaning of the word.

The domicile test

If a person's domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

Domicile

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.

Although you were born in Country X, you are only a citizen of Australia and therefore your domicile is Australia.

You have not changed your domicile as you are not a permanent resident or citizen of another country, including Country X.

Permanent place of abode

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 Country X visa is an employment visa that does not allow you to stay in Country X permanently

• You stay in employer-supplied hotel accommodation in Country X

• You maintain a family home in Australia with your household effects

• Your spouse remains in Australia living in the family home

As your domicile is Australia and the Commissioner is not satisfied that you have a permanent place of abode outside of Australia, you are therefore a resident under this test.

Conclusion

As you are a resident of Australia under both the resides test and the domicile test, you are therefore a resident of Australia for tax purposes. It is not necessary to consider the 183 day test or the Commonwealth superannuation test. As a resident of Australia for tax purposes, your worldwide income is assessable in Australia and must be included in your Australian income tax return.