Edited version of your written advice

Authorisation Number: 1012936286389

Date of advice: 21 January 2016

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 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commenced on:

25 August 2012

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a citizen of Australia.

You travelled to Country Z some time ago with the intention to live there as long as possible.

You first entered Country Z on visa type A.

When you arrived in Country Z your visa was converted to visa type B.

You currently hold a permit type C.

You have renewed your current permit type C once and must do so every year.

You intend to live in Country Z as long as possible.

You intend to apply for permanent residency in Country Z.

Your intention is to return to Australia if permanent residency in Country Z is refused.

You advised your private health insurance provider in Australia to suspend your membership indefinitely.

On your incoming and outgoing passenger cards you have never stated that you were leaving Australia permanently.

Prior to departing Australia you were living with family and had no household effects.

Your personal effects have been left at your family's house in Australia.

Your current assets in Australia consist of a savings account and an investment account.

You have not advised any Australian financial institutions that you are a non-resident of Australia for tax purposes.

Your current assets in Country Z consist of two bank accounts, a car, and a number of household effects.

You have lodged income tax returns in Country Z every year you have lived there.

You have not maintained any professional, social or sporting connections with Australia.

You have established and maintain professional connections in Country Z.

You have obtained two university degrees and a driver's licence in Country Z.

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

You have retained your ABN and wish to continue using it.

You or your spouse have never been employed by the Commonwealth of Australia.

You or your spouse are not eligible employees in relation to the Commonwealth Superannuation Scheme or the Public Sector Superannuation Scheme.

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.

However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to 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.

You are a citizen of Australia.

You travelled to Country Z some time ago with the intention to live there as long as possible.

You currently live with your spouse who is a Country Z citizen.

Your only assets in Australia are a bank account and an investment account.

You intend to apply for permanent residency in Country Z.

You only intend to return to live in Australia if the residency application is refused.

Based on the facts above you are not residing in Australia according to ordinary concepts.

The domicile test

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

Generally, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law.

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.

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

In your case, even though you are a citizen of Australia, you intend to reside in Country Z for as long as possible with your partner. You have also stated that intend to apply for permanent residency in Country Z. Therefore the Commissioner is satisfied that you do have a permanent place of abode outside of Australia and you are therefore not considered to be a resident of Australia for tax purposes.

The 183 day test

Where a person is present in Australia for 183 days during the year of income the person is a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside of Australia.

You do not satisfy this test as you have established a permanent place of abode outside of Australia.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.

Generally this would include a permanent or temporary employee of the Australian Public Service (APS).

You are not considered to be a resident of Australia under this test.

Your residency status

As you are not deemed to be a resident of Australia under any of these tests of residency, 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.