Edited version of your written advice

Authorisation Number: 1012895328320

Date of advice: 20 October 2015

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes whilst your spouse and dependents are still living in Australia?

Yes.

Are you a resident of Australia for taxation purposes after your spouse and dependents have left Australia?

No.

This ruling applies for the following periods:

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commenced on:

1 August 2014

Relevant facts and circumstances

You are a citizen of Country A.

You hold a Special Visa (SV) in Australia.

You have lived in Australia and Country A since your SV was granted.

You have a contract with a foreign company and carry out your employment in Country B.

Your contract with the foreign company commenced some time ago.

You departed Australia some time ago and have returned to visit your family a number of times.

You rent private accommodation in Country B.

Your salary is split between a Country B bank account and an Australian bank account.

You do not receive any superannuation paid into an Australian account.

You initially accepted the employment contract with the foreign company for a period of less than 2 years; however this has now been extended.

You are considering accepting another extension towards this contract to manage another project in Country B.

Your spouse and dependents are currently living in Australia, but intend to return to Country A permanently.

It is unlikely that you and your family will return to Australia to live due to family commitments in Country A.

You have no other family in Australia apart from your spouse and dependents.

You have maintained your personal effects with family prior to departing Australia.

You have maintained bank accounts in Australia while your spouse and dependents are still living in Australia.

You have assets consisting of bank accounts and some personal property whilst in Country B.

You have a bank account in Country A which is currently subject to non-resident withholding tax until your spouse and dependents move back to Country A.

It is your intention to sell your property in Australia when your family moves to Country A pending market conditions.

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

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 inside or outside 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 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 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.

You were residing in Australia with your spouse and dependents before commencing employment in Country B.

You maintained your household effects and some of your personal effects in Australia.

You departed Australia some time ago and have returned to visit your family a number of times.

Your spouse and dependents are currently living in Australia, but intend to return to Country A permanently.

It is your intention to sell your property in Australia when your family moves to Country A pending market conditions.

Based on the facts above you are residing in Australia according to ordinary concepts whilst your spouse and dependents are still living in Australia.

Based on the facts above you are not residing in Australia according to ordinary concepts after your spouse and dependents have left Australia.

The domicile test

If a person's domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that 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.

Your domicile of origin is Australia.

The Commissioner is satisfied that whilst your spouse and dependents are still living in Australia you do not have a permanent place of abode outside of Australia for the following reasons:

• You hold a SCV in Australia

• You have maintained most of your belongings in Australia

• You have maintained bank accounts in Australia

• Your spouse and dependents intend to remain in Australia for the immediate future.

You are a resident under this test until your spouse and dependents leave Australia.

The Commissioner is satisfied that after your spouse and dependents leave Australia you do have a permanent place of abode outside of Australia for the following reasons:

• You are a citizen of Country A

• Your spouse and dependents are your only family connection to Australia and they intend to move permanently to Country A

• You intend to sell your house and take all of your personal and household effects out of Australia.

• You do not have employment in Australia.

Your residency status

Accordingly as you are a resident under the resides and domicile test you are a resident of Australia for taxation purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 whilst your spouse and dependents are still living in Australia.

Accordingly as you are a non-resident under the resides and domicile test you are a non-resident of Australia for taxation purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 after your spouse and dependents leave Australia.