Edited version of your written advice

Authorisation Number: 1012740511631

Ruling

Subject: residency

Questions and answers

Are you a resident of Australia for taxation purposes?

Yes

This ruling applies for the following period

Year ended 30 June 2013

Year ended 30 June 2014

The scheme commenced on

1 July 2012

Relevant facts

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.

Your country of origin is Australia.

You left Australia in 2013.

You have a Tier 2 (general) migrant visa.

Your purpose for moving overseas was for employment reasons.

Your employment in Country A ended abruptly.

You returned to Australia on completion of your employment.

You lived in rented accommodation when living overseas.

You own an apartment in Australia which you rented out while you were overseas.

You are not nor were you a Commonwealth Government employee.

Relevant legislative provisions

Income Tax Assessment Act 1936 6(1).

Income Tax Assessment Act 1997 Section 6-5.

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 test

• the 183 day test

• the superannuation test.

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 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'.

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 courts have stated that the word 'reside' should be given the widest meaning.

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 to different countries

(viii) Maintenance of Place of abode.

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

(i) Physical presence in Australia

A person does not necessarily cease to be a resident because he or she is physically absent from Australia.

In Koitaki Para Rubber Estates Limited v Commissioner of Taxation HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249):

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.

You have been living in country A returning to Australia on completion of your employment.

(iii) History of residence and movements

You have lived in Australia and have Australian Citizenship.

You left Australia in 2013.

(iv) Habits and "mode of life"

You commenced working in country A. You were living in rented accommodation.

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

Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country.

You have returned to Australia when your employment was terminated early.

(vi) Purpose of visits to or absences from Australia

The purpose of your absence from Australia was to work in Country A for a period of at least 2 years.

You only returned to Australia when your employment was abruptly terminated.

(vii) Family and business ties to Australia and the overseas country

Family

You were living in country A in rented accommodation. No family members accompanied you to the Country A.

Business or economic ties

You do not have any business ties in Australia.

Assets

You have a bank account, shares and own a property in Australia.

Maintenance of Place of abode in Australia

You own a property in Australia.

You rented the property out while you were overseas.

Summary

As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning.

There are various factors outlined above which indicate that you will cease to be a resident of Australia. Specifically;

• your intention was to work in Country A for a minimum of two years.

Based on a consideration of all of the factors outlined above, you will not maintain a continuity of association with Australia while you are overseas. You have returned to Australia but your intention was to remain in country A for at least two years.

You will not be a resident under the resides test of residency for the period 24 January 2013 to 1 July 2014.

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.

Domicile is a legal concept to be determined according to the Domicile Act 1982 and to the common law rules which the courts have developed in the field of private international law.

The primary common law rule is that a person acquires at birth a domicile of origin, being the country of his or her father's permanent home.

You are an Australian citizen who owns a property in Australia.

You have not applied for permanent residency outside of Australia. You have retained your domicile of birth. You have an Australian domicile.

You have been living in rented properties in country A, for short periods.

As you have an Australian domicile and do not have a permanent place of abode outside Australia you are a resident of Australia for tax purposes under this test.

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 do not satisfy this test as you will be here for less than 183 days and do not intend to return at all.

The superannuation test

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

Generally this would include a permanent or temporary employee of the Australian Public Service (APS).

As you are not nor have been a Commonwealth Government employee, you are not considered to be a resident of Australia under the superannuation test.

Conclusion.

As you have a domicile in Australia and no permanent place of abode outside Australia you are a resident of Australia for tax purposes for the period you were overseas.