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Edited version of your written advice
Authorisation Number: 1012881278899
Date of advice: 24 September 2015
Ruling
Subject: Residency
Questions and answers
Are you a resident of Australia for taxation purposes?
No
This ruling applies for the following period
Year ended 30 June 20YY
The scheme commenced on
1 July 20ZZ
Relevant facts
You are a citizen of Australia.
Your country of origin is Australia.
You and your family left Australia in 20XX to work in Place A for a period of 2 to 5 years.
In early 20YY you left Place A and moved to Country A.
You have a permanent job for a local Country A company.
You have a "Pass" which allows you to live and work in Country A.
This is reviewed every five years.
Your spouse and children moved back to Australia and live in a property originally purchased as an investment property.
Your spouse earns sufficient income to meet the family living expenses but you send funds to a joint account to help meet these expenses.
There is no mortgage on the property in Australia.
Your original family home in Australia was sold while you were living in Place A.
You rent a residential property in Country A and you have your own furniture and fittings.
You intend to stay and work in Country A for at least the next few years.
You intend to visit Australia to see your family each year.
You plan for the family to visit you in Country A while you work there.
You have superannuation paid into a Country A retirement fund.
You nor your spouse not nor have been members 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.
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 A on a full time ongoing basis.
• You do not intend to return to Australia to live in the foreseeable future
• Although your spouse lives in Australia, you will only visit your family in Australia for a few weeks each year.
• You have lived outside of Australia for three years prior to moving to Country A.
• You are renting accommodation in Country A and have purchased furniture and fittings for it.
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.
The domicile test
If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.
Domicile
In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.
Paragraph 8 of IT 2650 explains that 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.
Paragraph 21 states that '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.'
You departed Australia on early August 20XX for Place A where you intended to stay for 2 to 5 years. On 31 January 20YY you moved to Country A where you took up employment.
You are an Australian citizen and your country of origin is Australia. You have a work permit that allows you to remain in Country A for five years while you are employed.
Applying IT 2650 to your circumstances with regard to your domicile you have not sufficiently demonstrated an intention to acquire a new domicile of choice in Country A. Therefore, you have maintained your Australian domicile.
Permanent place of abode
The expression permanent 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 persons 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 the person intends to live for the rest of his or her life. It should be contrasted with a temporary or transitory place of abode outside of Australia.
IT 2650 outlines some of the factors considered relevant in determining a person's place of abode. These are summarised at paragraph five in the ruling as:
• the intended and actual length of the individuals stay in the overseas country (a period of two years or more in a country would generally be regarded as a substantial period)
• any intention either to return to Australia at some definite point in time or to travel to another country
• the establishment of a home outside of Australia
• the abandonment of any residence of place of abode the individual may have had in Australia
• the duration and continuity of the individuals presence in the overseas country, and
• the durability of association that the individual has with a particular place in Australia.
The Commissioner is satisfied you have established a permanent place of abode in Country A. Therefore, the domicile test is not met.
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 do not satisfy this test for the income years as you were not in Australia 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.
Conclusion
As you do not meet any of the four residency tests you are not an Australian resident for tax purposes.