Edited version of your written advice

Authorisation Number: 1012873003662

Date of advice: 7 September 2015

Ruling

Subject: Residency

Question and answer

Were you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods

Year ending 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts and circumstances

You are a citizen of a foreign country.

Your country of origin is a foreign country.

In the several years prior to your arrival in Australia you lived in a foreign country

You arrive in Australia.

The type of visa you were granted to enter Australia is a temporary work related visa. You have provided a copy of the visa.

The visa does not allow you to stay permanently. It is still valid.

You have not applied to have the end date of your visa extended.

You have not applied for permanent residency.

The purpose of your visit was to take up an employment contract in computing.

You do not intend to reside in Australia permanently.

You departed Australia.

You do not hold a return airline ticket.

You did not leave Australia for any period between arriving and departing.

You previously entered Australia on two occasions.

You do not have a permanent place to live in Australia. While in Australia, you lived in rented accommodation.

Your assets in Australia are:

• a bank account

• a superannuation account

In a foreign country you live in an apartment you own. It was not rented out while you were in Australia.

Your assets in a foreign country:

• a furnished apartment

• a bank account

You are receiving income from a non-Australian source. You are self-employed in a foreign country. You have contracts with different clients offering software consultancy.

You do not have a position or job being held for you in a foreign country or in Australia.

No family accompanied you to Australia. You are single and have no children.

Your social and sporting connections with Australia were membership of several clubs.

The only social or sporting connection you have with a foreign country is a gym membership.

You were a resident of a foreign country for tax purposes during your stay in Australia.

You have never been a Commonwealth of Australia Government employee for superannuation purposes. You have no spouse and you are over 16 years of age.

You are not enrolled in a course of study in Australia that is more than six months long.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5

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 (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 first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650).

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 (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.

There are several factors outlined above which indicate that you did not cease to be a resident of a foreign country while you were in Australia, specifically:

• You are a citizen of a foreign country which is also your country of origin.

• In the several years prior to your arrival in Australia you lived in a foreign country.

• You entered Australia on an employment visa. The visa does not allow you to stay permanently.

• The purpose of your visit was to take up paid employment.

• You arrived in Australia on X and departed on Y (a period of less than 183 days).

• You did not leave Australia for any period between your arrival and departure.

• You did not apply for permanent residency and you did not intend to reside in Australia permanently.

• While in Australia you lived in rented accommodation.

• In a foreign country you own a dwelling which was not rented during your time in Australia.

• You have no family in Australia and no family accompanied you to Australia.

• Your social and sporting connections with Australia were membership of several clubs.

• In a foreign country you have a gym membership.

• You were a resident of a foreign country for tax purposes during your stay in Australia.

Based on a consideration of all of the factors outlined above, you were not a resident of Australia according to ordinary concepts as you maintained a continuity of association with a foreign country while you were in Australia.

The domicile and permanent place of abode test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned.

As you remained a foreign country citizen while living in Australia, your domicile is a foreign country and remains unchanged.

Permanent place of abode

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.

In your case, while in Australia you lived in rented accommodation while in a foreign country you own a dwelling which was not rented during your time in Australia.

You did not establish a permanent place of abode in Australia as your presence here was temporary in nature. You cannot establish a permanent place of abode when your presence in a place is temporary.

The Commissioner is satisfied you have a permanent place of abode outside of Australia.

Therefore, you were not a resident of Australia under the 'domicile and permanent place of abode' test of residency.

The 183-day test

Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia.

You were in Australia for less than 183 days during the income year of the ruling. You were not present in Australia for a total period of more than half of the income year.

Therefore you were not a resident of Australia under the 183-day test.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (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 stated that you are not eligible to contribute to the PSS or CSS. Further, you have no spouse and are more than 16 years of age. Therefore, you are not 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 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes.