Edited version of your written advice

Authorisation Number: 1012965067225

Date of advice: 24 February 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 2015

Year ending 30 June 2016

The scheme commenced on

The scheme has commenced

Relevant facts and circumstances

Your country of origin is foreign country A.

You are a citizen of both foreign country A and Australia. You have dual citizenship due to foreign country A being your country of origin.

You have not been granted permanent residency by any country.

You departed Australia. You visited foreign country B, The purpose of your visit was to marry a foreign national. You did not need a visa for this visit. You were allowed to stay three months. You will then go to other overseas countries and, after three months, re-enter foreign country B.

You do not intend residing overseas permanently. You plan to return to Australia when you are older.

Your overseas address is your spouse's property.

Prior to leaving Australia you lived in rented accommodation.

You returned to Australia for a period after first leaving. The purpose of the visit was to stay with your spouse.

Your maintain bank accounts are in Australia.

While overseas you made investments in Australia, purchasing investment properties. At the time of purchase, you stated foreign country A as your residency status.

Your household effects in Australia are in the rented properties.

You don't have any personal effects in Australia.

You received only rental income from Australia.

You have not advised any Australian financial institutions including any Australian companies with which you have investments with that you are a foreign resident because you were an Australian resident last year.

You do not own any assets overseas.

You lodged foreign income tax returns while living overseas, in foreign country A. 

You lodged Australian income tax returns while you were overseas.

You have a spouse but no dependents or children.

You do not maintain any professional, social or sporting connections with Australia.

You have not established any professional, social or sporting connections overseas.

You have not obtained any overseas qualifications (such as a driver's licence).

You have not maintained any professional or occupational memberships in Australia.

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

Neither you nor your spouse has ever been employed by the Commonwealth of Australia.

You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990.

You are not an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

You are not the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

You did not inform the Australian Electoral Commission or Medicare that you were departing Australia.

You did not inform Medicare that you were departing Australia. You do not have private health insurance.

When completing incoming and outgoing passenger cards, you stated as your residency status and address on these documents as foreign country A.

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.

Summary

As stated above it is important 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 are a citizen of both foreign country A and Australia.

• You have not been granted permanent residency by any country.

• You departed Australia for foreign country B to marry a foreign national.

• Your overseas address is your spouse's property in foreign country B.

• You do not intend residing overseas permanently. You plan to return to Australia.

• Prior to leaving Australia you lived in rented accommodation.

• You returned to Australia for a period after first leaving, to be with your spouse.

• Your maintain bank accounts are in Australia.

• While overseas you purchased investment properties in Australia, from which you receive rental income.

• Your household effects in Australia are in the rented properties.

• You don't have any personal effects in Australia.

• You do not maintain any professional, social or sporting connections with Australia or with overseas countries.

• You do not have employment overseas and you do not have a position or job being held for you in Australia.

• You have not advised any Australian financial institutions or companies with which you have investments with that you are a foreign resident.

• You do not own any assets overseas.

• You lodged foreign income tax returns while living overseas, in foreign country A. 

• You lodged Australian income tax returns while you were overseas.

• You did not inform the Australian Electoral Commission or Medicare that you were departing Australia.

Based on a consideration of all of the factors outlined above, you are not a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia for the period of the ruling.

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.

In your case, you were born in foreign country A and moved to Australia and became a citizen of Australia.

Therefore, your domicile of origin was foreign country A and you changed your domicile to Australia. Your domicile will still be Australia while you are overseas as you have not indicated that you will be taking any legal steps to change your domicile to that country.

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.

While in Australia you were living in rented accommodation. You are living with your spouse in this dwelling in foreign country A.

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 for the period of the ruling.

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 for the period of the ruling.

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 neither you nor your spouse is eligible to contribute to the PSS or the CSS. Further, you are more than 16 years of age. Therefore, you are not a resident of Australia under the superannuation test for the period of the ruling.

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.