Edited version of your written advice

Authorisation Number: 1012891765309

Date of advice: 9 November 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 2015

The scheme commenced on

1 July 2014

Relevant facts and circumstances

You are a citizen of Australia.

Your country of origin is Australia.

You departed Australia to live and work in a foreign country.

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

You have a visa for a foreign country. It does not allow you to stay there permanently. The visa is for one year and it must be renewed annually. It is your intention to renew this visa. The visa was supplied by an employer.

There is a possibility than your employment can be extended, although you do not know for how long.

Whether or not you will remain in a foreign country depends on whether your current employment is extended beyond your current contract. You will live in a foreign country for the duration of such an extension. If your employment is not extended beyond the current contract you plan to return to Australia.

While living in a foreign country you performed some paid work for an Australian employer. You no longer work for them.

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

In a foreign country you have been living in a rented apartment.

You have not returned to Australia since leaving.

You have yet to lodge an Australian income tax return while in a foreign country.

In Australia you were living with your parents. You did not have your own home in Australia.

You maintain assets in Australia:

• Several bank accounts; and

• A superannuation account.

You have not made any investments in Australia while in a foreign country.

Your household effects have been given to family members in Australia.

Your personal effects are being stored at your parents place in Australia.

You receive income from Australia bank interest.

You have not advised any Australian financial institutions including any Australian companies with which you have investments with that you are a foreign resident so that non-resident withholding tax can be deducted.

Your assets in a foreign country:

• Bank accounts (one checking and one savings.

• Furniture, household effects, and computer equipment.

You have not lodged any foreign income tax returns while living in a foreign country. To your knowledge your foreign country income tax is automatically deducted by your employer.

You do not have a spouse, partner or dependents.

No family members accompanied you to a foreign country.

While in a foreign country, you continued your membership of several Australian organisations.

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

You have not obtained any qualifications in a foreign country; such as a driver's licence.

You have informed the Australian Electoral Commission that you are living overseas.

On your outgoing passenger card from Australia, you stated you are an Australian resident and listed your Australian address.

You have never been employed by the Commonwealth of Australia. You are not a member of the PSS or CSS.

You are over 16 years of age.

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 departed Australia to live and work in a foreign country.

• You have a visa for a foreign country. It does not allow you to stay there permanently and must be renewed annually. It is your intention to renew your visa.

• There is a possibility than your employment can be extended, although you do not know for how long.

• Whether or not you will remain in a foreign country depends on whether your current employment is extended beyond your current contract; which you will accept, if offered.

• If your employment is not extended you will return to Australia.

• You have not returned to Australia since your departure.

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

• In a foreign country you have been living in a rented apartment.

• You do not have your own home in Australia. Prior to your departure, you were living with your parents.

• In Australia you have bank accounts and a superannuation account.

• In a foreign country you have bank accounts and household effects.

• Your household effects have been given to family members in Australia.

• Your personal effects are being stored at your parents' place in Australia.

• You do not have a spouse, partner or dependents.

• No family members accompanied you to a foreign country.

• You have maintained membership of several Australian organisations.

Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you have not maintained 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.

In your case:

• You departed Australia to live and work in a foreign country.

• You have a visa for a foreign country. It does not allow you to stay there permanently and must be renewed annually. It is your intention to renew your visa.

• You will continue to live and work in a foreign country if your current employment is extended beyond your current contract.

• If your employment is not extended you will return to Australia.

• You have not returned to Australia since your departure.

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

• In a foreign country you have been living in a rented apartment.

• You do not have your own home in Australia. Prior to your departure, you were living with your parents.

• Your household effects have been given to family members in Australia.

• Your personal effects are being stored at your parents' place in Australia.

• You do not have a spouse, partner or dependents.

• No family members accompanied you to a foreign country.

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

Therefore, you are not a resident of Australia under the 'domicile and permanent place of abode' test of residency for the relevant period.

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 present in in Australia until you departed Australia for a foreign country; a period of less than 183 days. You were not present in Australia for a total period of more than half of the income year of the ruling.

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

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 for the relevant period.