Edited version of your written advice

Authorisation Number: 1012778333350

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2014

The scheme commenced on:

1 July 2013

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 Australia is your country of origin.

You left Australia with a destination for country A.

You have a Visa that is valid for one year and you are awaiting a decision on a further 2 year visa.

Your visa (when approved) will not allow you to live there permanently. You would have to extend it by another 2 years and thereafter apply for residency.

Your purpose for travelling to country A was and is to work with your current employer.

It is your intention to reside in country A or another overseas country indefinitely. You have no intention of returning to Australia in the immediate future.

You have not returned to Australia since you left, but are returning soon for three weeks. You have provided a copy of your airline ticket.

Your employer allows you 5 weeks annual leave which you used for research and development trips last year.

Prior to your departure from Australia you lived in rental accommodation with three others.

You do not have a permanent place to live in Australia.

You live with your partner in country A and you have provided a copy of your registration of address with the country A tax office.

Your employer in country A does not provide you with accommodation.

Your only asset overseas is your bank account.

You have a bank account in Australia which remains open as a 'place holder'.

Your household effects are either in storage with your parents, sold or taken overseas with you.

You do not receive income from any Australian sources.

You are employed full time on an open-ended contract which is sponsoring your visa application. Your employment can be extended subject to having a valid visa , for which your employer would sponsor you.

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

No family has accompanied you overseas.

You do not have social or sporting connections in Australia or country A.

You have never been a Commonwealth Government of Australia employee.

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

You still hold Medicare and private health insurance in Australia.

You have lodged a tax return in country A and will be lodging one in the future when you have details from your employer.

You stated on the Australian Immigration Outgoing passenger card that your reason for leaving Australia was for career research and a work offer.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5

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 with a destination country A.

You have a Visa that is valid for one year and you are awaiting a decision on a further 2 year working visa.

Your visa (when approved) will not allow you to live there permanently. You would have to extend it by another 2 years and thereafter apply for residency.

You do not have a permanent place to live in Australia.

You live with your partner in country A and you have provided a copy of your registration of address with the country A tax office.

You are employed full time on an open-ended contract which is sponsoring your visa application. Your employment can be extended subject to having a valid visa, for which your employer would sponsor you.

You were not physically present in Australia in the 2014 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 2014 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 applied for a two year visa.

It is your intention to reside in country A or another overseas country indefinitely. You have no intention of returning to Australia in the immediate future.

You live with your partner in country A.

You do not have a permanent place to live in Australia.

Based on these facts, the Commissioner is satisfied that you have established a permanent place of abode overseas.

In your case, you have been living and working in country A for over 12 months. You rent a property in country A with your partner, you moved to country A to take up an employment opportunity and you do not have assets or a place to live in Australia.

Therefore, you are not 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 2014 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 a Commonwealth Government employee.

You are not a resident under this test.

Your residency status

You are not a resident of Australia for taxation purposes for the 2014 income year.