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Edited version of your written advice
Authorisation Number: 1012756092872
Ruling
Subject: Residency and leaving Australia
Questions and answers
Are you a resident of Australia for taxation purposes?
No
This ruling applies for the following period
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on
1 July 2013
Relevant facts
You are a citizen of Australia.
Your country of origin is Country A.
You were born in Country Z.
You have been granted a work permit and stay permit in Country B.
This is renewable every year. You intend to extend your visa further and will continue to work and stay in Country B in the future.
Your spouse has also been granted a stay permit in Country B and will be living with you in Country B.
You left Australia in 2013.
You have a work permit in Country C.
You will be visiting Country C on a regular basis as part of your work responsibilities.
You were employed in Australia when you were living here.
You moved to country B to take on work that included business interests in Country C.
You have been appointed to a senior management role. This appointment is to be reviewed every two years.
You are renting accommodation in Country B.
You intend to live in Country B for the foreseeable future.
You intend to visit Australia once or twice a year.
You have opened bank accounts in Country B.
You have no place of abode in Australia.
When you were living in Australia you were living in a rented property.
You do not have a permanent place to live in Australia.
You and your spouse are not nor have been a member of the CSS or PSS superannuation scheme.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 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. 3rd 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 [1941] 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 working in Country B and Country C for more than a year. You return to Australia once or twice a year to administer the Australian operation of your employment.
(ii) Nationality
You were born in country Z.
(iii) History of residence and movements
You have lived in Australia and you have Australian Citizenship.
(iv) Habits and "mode of life"
You have commenced working in Country B and Country C. You and your spouse are living in rented accommodation in Country B.
(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 return to Australia once or twice a year to look after Australian operations relating to your employment and visit your relatives.
(vi) Purpose of visits to or absences from Australia
You return to Australia once or twice a year to look after Australian operations and visit your relatives.
(vii) Family and business ties to Australia and the overseas country
Family
You have a relative living in Australia who you visit once or twice a year.
Your spouse has travelled to Country B with you.
Business or economic ties
Your employment includes a business operation in Australia that you come to Australia once or twice a year to look after the operations of.
Assets
You have bank accounts in Australia.
Maintenance of Place of abode in Australia
You do not own a property in Australia.
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 not be a resident of Australia for tax purposes. Specifically;
• You will continue to work in Country B and Country C on an ongoing basis and you will be renewing your visa every two years.
• You do not intend to return to Australia to live in the foreseeable future
• You have bank accounts in Australia.
• You do not own property in Australia.
• You have opened bank accounts in Country B and have strong social connections there.
• Your spouse will be living with you in Country B.
Based on a consideration of all of the factors outlined above, you will not maintain a strong continuity of association with Australia while you are overseas. You do not intend to return to Australia to live in Australia in the foreseeable future.. Therefore, you will not be residing in Australia in accordance with the ordinary meaning of the word.
You will not be a resident under the resides test for the income tax year ending 30 June 2014.
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 for the income years as you were not here for more than 183 days.
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 and your spouse are not nor have been a Commonwealth Government employee contributing to the PSS or CSS schemes, you are not considered to be a resident of Australia under the superannuation 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, you are not an Australia resident for income tax purposes.