Edited version of your written advice

Authorisation Number: 1012732093448

Ruling

Subject: Residency

Question and answer

Were you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 20YY

The scheme commenced on:

1 July 20ZZ

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

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

You are not a resident or citizen of any other country.

You left Australia to take up a fellowship in country A, and returned temporarily a year later.

You arrived in country A on a working visa which is valid for 3 years and does not allow you to stay permanently.

You lived in a rental apartment in country A for 12 months.

You moved to country A and set up a new home with the intention of living there indefinitely.

You returned to Australia to take up a temporary assignment up to 6 months with the possibility of extension.

You are leasing a property through a real estate agent in Australia until early 20XX.

You intend returning to country A in early 20XX.

You have not considered extending your visa as you are hopeful you will be marrying a country A citizen soon.

You intend applying for country A citizenship if you marry.

When you return to country A you will live with your future spouse and their parents in their parents' home.

The country A authorities do not consider you to be a resident of country A while you are working in Australia.

You do not hold a return ticket to country A.

The only assets you have in Australia and in country A are bank accounts.

You are employed by an Australian employer from mid 20YY to early 20XX.

You have a handshake agreement in place to hold a position open for you in country A.

Your partner did not accompany you back to Australia but came to visit you for one month in late 20YY.

You social ties in Australia include your family and work colleagues.

Your social and professional connections in country A include professional and artistic associations/memberships.

You were a resident of country A for tax purposes however you were not taxed on your fellowship income there.

You have not been a Commonwealth of Australia Government employee.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision

Residency

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.

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

• resides test;

• domicile and permanent place of abode test;

• 183 day test; and

• 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.

The resides (ordinary concepts) 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

(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 TR 98/17 Income Tax: residency status of individuals who enter Australia, and Taxation Ruling IT 2650 Income Tax: residency status of individuals who temporarily live outside Australia.

Taxation Ruling TR 98/17 states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

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

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

You are not a permanent resident or citizen of any other country.

You left Australia in mid 20ZZ to take up a fellowship in country A, and returned temporarily in mid 20YY.

You arrived in country A on a working visa which is valid for 3 years and does not allow you to stay permanently.

You lived in a rental apartment in country A for 12 months.

You moved to country A and set up a new home with the intention of living there indefinitely.

You returned to Australia to take up a temporary assignment with an Australian employer for 4 to 6 months with the possibility of extension.

You lived in country A from mid 20ZZ until mid 20YY.

You were not physically present in Australia in the 20YY income year. You did not maintain a home in Australia.

Based on the facts above you were not residing in Australia according to ordinary concepts for the 20YY income year.

The domicile test

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

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

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.

You have not applied for residency or a long term visa, or tried to change your domicile in any other way. Your domicile is still Australia.

You will only return to country A permanently if your partner proposes marriage and you will live with their parents in their home.

Based on these facts, the Commissioner is not satisfied that you have established a permanent place of abode overseas.

In your case, you were living and working in country A. You rented an apartment while you were there and returned to Australia to take up an employment opportunity.

Therefore, you are a resident of Australia for tax purposes.

The 183-day test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

You were not in Australia for more than 183 days in the 20YY income year.

You are not a resident under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.

You have never been Commonwealth Government employees.

You are not a resident under this test.

Your residency status

You are a resident of Australia for taxation purposes under the domicile test for the 20YY income year.