Edited version of your written advice

Authorisation Number: 1012917224623

Date of advice: 27 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 Australian.

Your country of origin is Australia.

You have not been granted permanent residency by any country.

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

You have not returned to Australia since your departure.

You entered a foreign country on a visa which does not allow you to stay permanently. Your visa was not supplied by an employer.

You are employed in a foreign country. You plan to stay in this role for the foreseeable future. Your employment contract will be valid until your work permit expires.

Prior to your departure you grew up, received schooling and worked in Australia.

Your movements since departing Australia:

• worked and lived in a foreign country

• travelled in a foreign country

• resumed work and lived in a foreign country

Your current intention is to stay in a foreign country in the short term. You intend to return to Australia in the long term.

Overseas you live in a rented apartment with a friend. You originally signed a rental agreement for several months. After this, your rental agreement is on a month to month basis. These are the standard terms in your apartment complex. You plan to reside at this address for the foreseeable future. Your overseas employer has never provided you with accommodation.

Prior to leaving Australia, you rented a house with a group of friends. You stayed at your parent's house prior to leaving Australia. You do not own a home in Australia.

You own shares in a number of publicly listed companies in Australia:

You receive interest and dividend income from Australian sources.

You have informed the bank that you are living and working overseas and are a non-resident for tax purposes.

While you were overseas you purchased additional shares. You were not asked to provide your residency status when you purchased these shares. When you originally purchased shares you were residing in Australia, hence you believe this share account would assume you are still residing in Australia.

Prior to your departure you sold some of your personal belongings and gave a number of items to family or friends. The remainder, together with your personal effects, you stored at your parent's house in Australia.

In a foreign country, you own a car, a bank account and some household effects (computer, sound system, sporting equipment, mattress, tools).

You have no spouse or dependents.

You have maintained no professional, social or sporting connections with Australia except membership one organisation.

In a foreign country you participate in events held by your employer's social club on a regular basis and you plan to buy a pass at a local sporting facility (which you have done in previous years).

You have obtained a driver's licence in the foreign country.

You are in the process of applying for membership with a professional association in a foreign country.

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

You are over 16 years of age.

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

Your private health insurance in Australia has been put on hold.

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

You have not informed Medicare that you are living overseas.

You cannot recall what you stated when completing incoming and outgoing passenger cards.

You have lodged tax returns in a foreign country. You stated on these tax returns that you are a foreign country resident for tax purposes.

You lodged a tax return with the ATO for a financial year. You stated that you were an Australian resident on this tax return. You were travelling in a foreign country when you submitted this tax return and you had not made a decision whether you would return to Australia or to a foreign country to work after you finished travelling.

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 not returned to Australia since your departure.

• You entered a foreign country on a visa which does not allow you to stay permanently.

• You are employed. You plan to stay in this role for the foreseeable future.

• Your current intention is to stay in a foreign country in the short term. You intend to return to Australia in the long term.

• Overseas you live in a rented apartment with a friend. You plan to reside at this address for the foreseeable future. Your overseas employer has never provided you with accommodation.

• You receive dividend and interest income from Australia.

• Prior to your departure you sold some of your personal belongings and gave a number of items to family or friends. The remainder, together with your personal effects, you stored at your parent's house in Australia.

• In a foreign country, you own a car, a bank account and some household effects (computer, sound system, sporting equipment, mattress, tools).

• You have no spouse or dependents.

• You have maintained no professional, social or sporting connections with Australia except membership of one organisation.

• In a foreign country you participate in events held by your employer's social club on a regular basis.

• You have obtained a foreign country driver's licence.

• You are in the process of applying for membership of a professional association in a foreign country.

• Your private health insurance in Australia has been put on hold.

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.

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

• You have not returned to Australia since your departure.

• Overseas you live in a rented apartment with a friend.

• You plan to reside at this address for the foreseeable future.

• Your overseas employer has never provided you with accommodation.

• Prior to leaving Australia, lived in rented accommodation.

• You do not own a home in Australia.

• Some of your belongings your personal effects are stored at your parent's house in Australia.

• You have no spouse or dependents.

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.

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 have not been present in Australia for a total period of more than half of the year of income.

Therefore you are not 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 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.