Edited version of your written advice

Authorisation Number: 1012901442162

Date of advice: 27 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 ended 30 June 2014

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia and the country B.

You left Australia on # and went to country A to begin a volunteer contract.

You had a single entry visa which was converted to multiple entry after two weeks.

The visa did not allow you to stay there permanently.

You accepted an extension of your assignment in country A until # and this was extended again until # and did not have any firm plans to return to Australia after that.

You lived in private rental properties while in country A.

You returned to Australia in #, but you were not sure that it would be permanently.

You did not maintain a home in Australia during the period you were in country A.

You put your belongings into storage while in country A.

You had a car, bank account, investment assets, and household items in Australia that were stored with friends and relatives.

The car and bed were later sold.

You had a motorbike in country A and kept your Australian bank account.

You do not have a spouse.

Your parents, sibling and extended family live in Australia.

You are not eligible to contribute to the relevant Commonwealth super funds.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Subsection 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(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.

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 three 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 went to country A for work purposes.

You intended to be in country A at least 1 year.

Your contract was extended twice and you returned to Australia more than 3 years later.

You lived in private rental properties for the period you were in country A.

Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were working in country A.

The domicile test

If a person's domicile is Australia they will be 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 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 you had a permanent place of abode outside Australia for the following reasons:

• You went to country A for more than 2 years

• You lived in private rental accommodation

• You sold your car and bed in Australia and purchased a motorbike in country A.

You are not a resident under this test.

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 were not in Australia for more than 183 days in the 2014 income year.

You are not a resident under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the 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 are not eligible to contribute to the relevant Commonwealth super fund.

Your residency status

You were not a resident of Australia for taxation purposes for the period you were working in country A.