Edited version of your written advice

Authorisation Number: 1012890898465

Date of advice: 14 October 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 ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

Year ending 30 June 2019

The scheme commenced on

1 July 2015

Relevant facts and circumstances

You are an Australian citizen. You were born in Australia.

You left Australia and have been based in a foreign country since then. You had not determined to live in a foreign country permanently.

You have married a foreign country national and have established a home in a foreign country.

You and your spouse decided to establish a foreign country as your permanent residence.

You have no intention to return to Australia other than for a short holiday or work requirements.

You have been resident in a foreign country on a multiple entry visa. The visa allows you to reside in a foreign country and is renewable. You have not been granted permanent residency in a foreign country.

You have rented a property in a foreign country and resided in the property. A copy of the lease agreement has been provided. The property has not been sourced or provided for by your employer.

You have a car, motor cycles, and household contents in a foreign country.

Prior to leaving Australia you lived in a property own jointly with your ex-spouse and another couple. It is currently rented out to unrelated tenants due to the inability to sell the property.

You currently obtain employment through an Australian recruitment agency that sources employees for work your particular industry. Your employment is on a contract by contract basis with no set term on each and every job. You are actively seeking permanent employment in a foreign country. You also assist your spouse in their business in a foreign country.

Other than the interest in the property, the only other asset owned by you in Australia is a bank account.

All household and personal effects were either taken overseas or gifted to family members or charity.

You obtained work through an Australian employment agency but work overseas.

There is no position in or being held for you in Australia.

You left an ex-spouse in Australia and have adult children living and working in Australia.

You have no social or sporting connections to Australia.

You have advised the Australian Electoral Commission of your departure and also advised Medicare.

Financial institutions will be notified that you are residing overseas so they can deduct non-resident withholding tax.

You have been lodging income tax returns in Australia up to and including the year ended 30 June 2015. Until this date you were an Australian resident for taxation purposes. You have not lodged a tax return in a foreign country.

You have no professional, sporting or social connections with Australia.

You have not established any professional, sporting or social connections in a foreign country.

You have obtained a foreign country driver's licence and have a car and motor bike.

You have not maintained any professional or occupational memberships in Australia.

Your private health insurance policy was cancelled.

Neither you nor your spouse has ever been eligible to contribute to the PSS or CSS.

You are over 16 years old.

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 have ceased to be a resident of Australia, specifically:

• You left Australia and have lived in a foreign country since then.

• You are employed in a particular industry. Your employment is on a contract by contract basis. You are actively seeking permanent employment in a foreign country.

• You have married a foreign country national and have established a home in a foreign country.

• You and your spouse decided to establish a foreign country as your permanent residence.

• The property you are a part owner of, and in which you lived prior to your departure, is rented out.

• You live in a rented property in a foreign country; it was not provided by your employer.

• You have licence to drive in a foreign country and own a car and motor cycles there.

• Prior to leaving Australia you lived in a property which you partly own. It is currently rented out due to the inability to sell it.

• All household and personal effects were either taken overseas or gifted to family members or charity.

• You have no intention to return to Australia other than for a short holiday or work requirements.

Based on a consideration of all of the factors outlined above, you will not be a resident of Australia according to ordinary concepts as you will not maintain a continuity of association with Australia for the relevant period.

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 are still an Australian citizen while living in a foreign country, your domicile is Australia 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.

• You left Australia and have lived in a foreign country since then.

• You are employed overseas.

• You are actively seeking permanent employment in a foreign country.

• You have married a foreign country national and have established a home in a foreign country.

• You and your spouse decided to establish a foreign country as your permanent residence.

• You have live in a rented property in a foreign country; it was not provided by your employer.

• You have licence to drive in a foreign country and own a car and motor cycles there.

• Prior to leaving Australia you lived in a property which you partly own. It is currently rented out due to the inability to sell it.

• All household and personal effects were either taken overseas or gifted to family members or charity.

• You have no intention to return to Australia other than for a short holiday or work requirements.

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

Therefore, you will not be a resident of Australia under the 'domicile and permanent place of abode' test of residency for the years of the ruling.

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, that is 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 will return to Australia for short visits for work or holidays. You will not be present in Australia for a total period of more than half of a year of income.

Therefore you will not be 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 neither you nor your spouse is eligible to contribute to the PSS or the CSS. Further, you 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.