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Edited version of your written advice
Authorisation Number: 1013002143136
Date of advice: 22 April 2016
Ruling
Subject: Residency
Question and answer
Are you a resident of Australia for taxation purposes?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The scheme commenced on:
1 July 2015
Relevant facts and circumstances
You were born in Australia.
You are a citizen of Australia.
You are not a permanent resident of any other country.
You will go to Country Y on X XXXX 20XX for work purposes and for pleasure.
You will work for an Australian employer while in Country Y.
You will have a tourist visa to enter Country Y.
Your tourist visa is required to be renewed every 6 months.
The tourist visa does not allow you to remain permanently in Country Y.
You do not intend on leaving Australia permanently.
You will be overseas for 2 years.
You currently live in rental accommodation in Australia which you will return to when you visit Australia.
You will return to Australia for a week at a time approximately every 4 months.
You will seek accommodation in Country Y or your employer may provide you with accommodation for the duration of your work commitments in Country Y.
You do not have a spouse or any dependants.
You have a bank account, household affects, line of credit, personal loan, credit cards and shares in Australia.
You do not have any assets overseas.
You are not eligible to contribute to the relevant Commonwealth Government Superannuation 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 will be going to Country Y for work and pleasure.
You will be in Country Y for approximately 2 years.
You will return to Australia for 1 week every 4 months.
You do not intend on leaving Australia permanently.
Your visa does not allow you to be in Country Y on a permanent basis.
You will work for an Australian employer in Country Y.
You will seek accommodation or your employer will provide your accommodation in Country Y.
Based on the facts above you will maintain your connection with Australia for the period you are working in Country Y.
You are a resident under this test.
Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident, under the resides test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument.
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.
A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice 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 Australia.
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.
The Commissioner is not satisfied that you set up a permanent place of abode outside Australia for the following reasons:
• You will rent accommodation through a sort term accommodation provider or your employer will provide you with accommodation in Country Y
• You have a rented property in Australia which you will return to when you visit every 4 months
• You do not intend on leaving Australia on a permanent basis
You are a resident under this test.
Your residency status
You will be a resident of Australia for taxation purposes for the period you are working in Country Y.