Edited version of your written advice

Authorisation Number: 1012831179469

Date of advice: 27 June 2015

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

The scheme commenced 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 A.

You are an Australian and a country A citizen.

You are a permanent resident of country A and Australia.

You worked in Australia for approximately 6 months, then 3 months in country A, then about 3 months in another overseas country.

You left Australia to travel to country A.

You are undecided about returning to country A to live permanently.

You have a country A passport which allows you to live in country A and other overseas countries.

You plan to return to Australia for a short visit in the near future.

You do not have a return airline ticket.

You have travelled a lot and the number of departures from Australia and other countries is too long to provide specific information.

You have lived as a permanent resident in country A and Australia, but have spent longer periods in a number of other countries.

Your ex-spouse lives in country A and you stay with him/her when you are there.

You do not pay your ex-spouse rent when you stay with him/her in country A.

You do not have any assets overseas.

Prior to leaving Australia you lived in your home and with your children in another state.

In Australia your assets include a house, car, household items, superannuation and shares.

Your household items remain in your home which is tenanted while you are away.

You receive an Australian pension and you receive dividends from Australia.

You have worked for two different employers overseas for over a year.

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

Your family did not accompany you as your children are all adults.

Your relationship with your ex-spouse is under redevelopment. You lived together for a few months last year in country A.

Your have social and sporting connections in Australia.

Your have social and sporting connections in country A.

You and your spouse were never Commonwealth Government of Australia employees.

You have not removed your name from the electoral roll.

You have not advised financial institutions that you are a foreign resident.

You have not advised companies that you have investments with that you are a foreign resident.

You have not advised Medicare to remove your name from their records.

You advised Centrelink that you were going overseas for a longer period of time.

You receive a country A pension.

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

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 IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

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

You were born in country A.

You are an Australian and country A citizen.

You left Australia on to travel to country A to be with friends and family.

Your ex-spouse lives in country A and you stay with him/her when you are there.

You have a home in Australia.

Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were/are overseas.

The domicile test

If a person's domicile is Australia they will be 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 to prove an intention to make his or her home indefinitely in that country.

Your domicile of origin is Country A and your domicile of choice is Australia.

You have not decided to stay permanently in Country A, you have made no decision about your future plans. Therefore your domicile remains Australia as you have not made any attempt to change your domicile of choice.

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.

The Commissioner is not satisfied that you set up a permanent place of abode outside Australia for the following reasons:

• You are a citizen of Australia.

• You are undecided about returning to Country A to live permanently.

• You have a home in Australia to return to.

• You are traveling around using Country A as a base for those travels.

You are a resident under this test.

Your residency status

You are a resident of Australia for taxation purposes under the domicile test for the period you are outside Australia.

As you are resident of Australia for tax purposes you must pay tax on all Australian and international income.