Edited version of your written advice

Authorisation Number: 1012863855312

Date of advice: 21 August 2015

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 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

The scheme commenced on:

1 July 2015

Relevant facts and circumstances

You are an Australian citizen.

You have not been granted permanent residency by any other country.

You plan to live in country A indefinitely.

You have been offered permanent full-time employment in country A with no end date.

It is your intention to live in country A permanently.

Your employment contract includes an annual free return ticket to Australia.

You do not have a start date as you are waiting on your work visa to be certified and sent off to country A.

You can live and work in Country A as long as your employer sponsors you.

You intend living with relatives in country A initially (address provided) and may look for an apartment later on.

Your employer offered you accommodation which you have declined as you will live with family.

You do not have any assets in country A, but intend setting up bank accounts and may purchase a car.

You intend to either throw away or give away your personal effects in Australia and will take your mobile phone and laptop with you.

You will keep your job open in Australia and may work there when you return for your annual holidays.

Your assets in Australia include your home and banks accounts. You sold your car.

You do not have assets in country A but intend setting up bank accounts when you are there.

You will receive holiday pay from your Australian for a short period of time after you leave Australia.

You will be employed in country A on a permanent full-time basis.

You do not have a spouse or children.

Your sporting and social connections in Australia include your employment, your parents, siblings and cousins.

Your sporting and social connections in country A include your employment and extended family.

You have advised the Australian Electoral Office to remove your name from the electoral roll.

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 an Australian citizen.

• You intend leaving Australia indefinitely to live and work in country A.

• You will live in country A on a business visa which allows you to stay there for two years and may be extended by your employer.

• You have a permanent place to live in Australia.

• You will live with your relatives initially in country A.

• You will seek other accommodation if living with your relatives does not work out.

• Your employment in country A is on a permanent full-time contract with no end date.

• You will return to Australia once a year as a free return flight is part of your employment contract.

Based on the facts above you will not be residing in Australia according to ordinary concepts from the date of your departure from Australia.

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. You will retain your domicile of origin unless and until you acquire a domicile of choice in another country or until you acquire another domicile by operation of law. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country, e.g. through having obtained a migration visa.

Your domicile is Australia as you do not have a permanent resident visa in an overseas 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.

The Commissioner is satisfied that you are setting up a permanent place of abode outside Australia for the following reasons:

• You are moving to country A indefinitely to live and work full-time.

• Your work contract does not have an end date.

• You will live with family initially but may look for your own accommodation later.

• You can live and work in country A as long as your employer sponsors you.

• You have sold your car and will give away any personal items you are not taking with you.

• You will return to Australia once a year as provided for in your work contract.

• You have advised the Australian Electoral Office to remove your name from the electoral roll.

You are not a resident 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 will not be in Australia for more than 183 days in any year, and it is considered that your usual place of abode will be outside Australia from the date of your departure.

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

Based on the facts you have provided, you will not be a resident of Australia for taxation purposes from the date of your departure.