Edited version of your written advice

Authorisation Number: 1012937022594

Date of advice: 29 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 20XX

Year ending 30 June 20XX

The scheme commenced on:

The scheme has commenced

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 Country A by birth.

You are a citizen of Australia by naturalisation.

You departed Australia some time ago for Country A.

You travelled to Country A with your spouse and children.

On your outgoing passenger card you stated you were an Australian resident.

You are not sure how long you intend to stay in Country A.

You have an indefinite employment contract in Country A.

You are not actively seeking employment in Australia.

You did advise Centrelink that you were departing Australia.

You plan to return to Australia sometime in the future.

You are considered a resident for tax purposes in Country A.

You have not lodged any tax returns in Country A.

You have lodged Australian income tax returns whilst overseas as an Australian tax resident.

Your assets in Australia consist of shares, bank accounts, and the family home.

You have rented out your family home in Australia to an unrelated party.

You continue to use the address of the rental property to receive mail.

You continue to use the address of the rental property as your residence on documents.

Your assets in Country A consist of a car, bank account, and household effects.

Your eldest child is registered with an Australian state government educational authority to complete Australian based home schooling whilst in Country A.

Your eldest child also currently attends a public school in Country A.

You have not yet notified the Australian state government educational authority that you have departed Australia but you intend to.

You would prefer all of your children to complete their education in Australia.

You or your spouse, are not members of the Public Sector Superannuation Scheme.

You or your spouse, are not eligible employees in respect of the Commonwealth 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.

Based on the facts stated 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.

Your domicile of origin is Country A. However, your domicile of choice became Australia when you were naturalised and lived in Australia.

While you current domicile is not clear, the Commissioner is satisfied that you do have a permanent place of abode outside of Australia for the following reasons:

• You have an indefinite employment contract in Country A

• Your spouse and children have relocated to Country A with you

• You are not actively seeking employment in Australia

• You do not know when you intend to return to Australian

• You are considered to be a resident for tax purposes in Country A

You are therefore not a resident under the domicile test.

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 a resident of Australia under this test.

Your residency status

As you are not 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.