Edited version of your written advice

Authorisation Number: 1012738932126

Ruling

Subject: Residency status

Question and answer:

Are you a resident of Australia for income tax purposes?

No.

This ruling applies for the following periods:

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

The scheme commences on:

1 July 2014

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 were born in country Y and are a citizen of country Y.

You have a spouse and dependants.

You moved to Australia and were granted permanent residency.

You accepted an employment contract to work on a project in country T for a number of years.

You and your family departed Australia to live in country T for the duration of your employment contract.

You and your family entered country T on a visa that was provided by your employer.

On arrival in country T you and your family lived in an apartment that was provided by your employer. You and your family have sole use of the apartment and have moved all of your furniture and belongings from Australia into the apartment.

Prior to departing Australia you lived in your family home. On departure from Australia your home was rented out to tenants. Your home contents were also shipped to country T.

You do not have any social or sporting ties to Australia.

Your overseas social and sporting ties consist of a gym membership and your dependents sporting team.

Prior to leaving Australia you and your spouse work both employed, however prior to departure you both resigned from your positions.

Your assets in country T consist of household belongings and a bank account.

Your assets in Australia consist of your family home and bank accounts.

You have not paid income tax in any other jurisdiction.

You bank account is a non interest earning account.

You do not have any investments other than your family home.

Neither you nor your spouse has been an employee of the Commonwealth Government of Australia.

Due to climate, your dependents educational needs, transport, restrictions placed on migrant workers and particularly terrorist activity, your spouse and dependants will return to Australia after spending only a number of months in country T.

When your spouse and dependents return to Australia they will move back into your family home.

Although you had originally planned to holiday in overseas, due to your spouse and dependants returning you will now return to Australia during your vacations. You intend to spend less than 183 days in Australia during each of the income years that you are employed in country T.

You intend to continue to live and work in country T under your contractual agreement which concludes in several years.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Residency

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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:

• the resides test

• the domicile test

• the 183 day test

• the superannuation test.

The first two tests are examined in detail in TAXATION RULING NO. 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 resides. 

However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests.

The resides test

In FC of T v Miller (1946) 73 CLR 93 at page 99-100 and Subrahmanyam v FC Of T [2002] AATA 1298; 2002 ATC 2303; (2002) 51 ATR 1173 at paragraph 43-44, it was determined that the word 'resides' should be given the widest meaning.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, identifies a number of factors which assist in determining the residency status of a taxpayer. Although Tax Ruling TR 98/17 discusses the Commissioners view on the residency status of individuals entering Australia, the same principles can be applied to those individuals leaving Australia.

According to paragraph 20 of TR 98/17 factors to be considered in determining residency in Australia are:

•  intention or purpose of presence;

•  family and business/employment ties;

• maintenance and location of assets; and

•  social and living arrangements.

Paragraph 21 of TR 98/17 further states that:

No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances.

Recent case law decisions have expanded on the list of factors identified in TR 98/17.  Case 5/2013 and Sneddon v FC of T (Sneddons Case), for example, considered the following factors in relation to whether the taxpayer resided in Australia:

(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.

In applying the above criteria to your circumstances significant is that you were born in country Y before moving to Australia and gaining permanent residency. You departed Australia with your spouse and dependants to live and work in country T. Since your departure from Australia you have not returned. While in country T you and your family live in an apartment that that was provided by your employer and which you have sole use. Your dependants have enrolled and attended educational institutions in country T. You have transported your household possessions and belongings with you to country T. Your assets in Australia consist of your family home (currently being rented to tenants) and bank accounts. Your assets in country T consist of a bank account, furnishings and household items that you brought with you from Australia. You intend to remain in country T for the duration of your employment contract that will conclude in a number of years.

In considering the above the Commissioner is satisfied that from the date of your departure from Australia you have established a degree of continuity, routine and habit that is consistent with residing in country T. Therefore, it is concluded that from the date of your departure on, you ceased to be a resident of Australia under the 'resides test'.

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 prove an intention to make his or her home indefinitely in that country.  In your case you were born in country Y, therefore your domicile of origin is country Y. You then moved to Australia and gained permanent residency, therefore electing Australia as your domicile of choice. From the information you have provided you have not demonstrated any intention of becoming a citizen or permanent resident of country T, therefore your Australian domicile remains unchanged.

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

Factors used in determining a taxpayer's permanent place of abode include:

• the intended and actual length of the taxpayer's stay in the overseas country;

• whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or return to Australia at some definite point in time;

• whether the taxpayer has established a home outside Australia;

• whether any residence or place of abode exists in Australia or has been abandoned because of overseas absence;

• the duration and continuity of the taxpayer's presence in the overseas country, and

• the durability of association that the person has with a particular place in Australia, that is, maintaining bank accounts in Australia.

In your case, you accepted an employment contract in country T for a number of years. You and your family departed Australia to live and work in country T for the duration of the employment contract. On arrival in country T you and your family moved in to an apartment that you furnished with household goods that you transported from Australia. Prior to departing Australia you placed your family home on the rental market.

In light of the above the Commissioner is satisfied that you have established a permanent place of abode outside of Australia.

Although it has been determined that your Australian domicile has remained unchanged, the Commissioner is satisfied that you have established a permanent place of abode outside of Australia from the date of your arrival in country T. Therefore as you have established a permanent place of abode outside of Australia, you are not a resident of Australia for income tax purposes under the 'domicile test' for the years included in this ruling.

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 will not be physical present in Australia for a period of greater than 183 days in any of the years included in this ruling. Therefore you will not be a resident of Australia for income tax purposes under the 183 day test.

The Superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.  Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

Neither you nor your ex-spouse has ever been a member of a CSS or PSS.

Accordingly, you are not a resident under this test.

Your residency status

As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes in the income years included in this ruling.

It is acknowledged that your spouse and dependants will be returning to Australia due to various issues and concerns. However from the information that you have provided the Commissioner does not believe that this fact will change your residency status according to ordinary concepts, or the domicile test as the Commissioner is still satisfied that you had a permanent place of abode overseas which you have maintained although your family returned to Australia and they have not maintained an abode overseas.