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Edited version of your written advice
Authorisation Number: 1013033894175
Date of advice: 14 June 2016
Ruling
Subject: Residency - Leaving Australia
Questions and answers
Are you a resident of Australia for taxation purposes?
No
This ruling applies for the following period
Year ended 30 June 2016
The scheme commenced on
1 July 2015
Relevant facts
You were born in Australia.
You are a citizen of Australia.
You left Australia in early 20xx.
You left Australia to take up employment in Country A.
You entered Country A on a work visa.
The visa allowed you to stay in Country A for one year.
The visa was supplied by your employer.
You intend to reside in Country A permanently.
You have a 12 month lease on a property in Country A.
Your employer did not provide you with accommodation in Country A.
You held a bank account and investments in Australia.
You have not made any investments in Australia while you have been overseas.
You received income from bank interest and share dividends in Australia while you were in Country A.
You have not advised Australian financial institutions of your Country A address.
You have acquired a bank account, credit card, car and loan facility while living in Country A.
You are separated from your spouse who is living in Australia.
You have no professional, social or sporting connections with Australia.
You have established professional, social and sporting connections in Country A.
You are employed by company A in Country A. Your contract is for one year.
You have not contributed to the PSS or CSS Superannuation Schemes.
There is no employment position in Australia being held for you.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1).
Income Tax Assessment Act 1997 Section 6-5.
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 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 test
The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.
The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.
In considering the definition of 'reside', the courts have stated that the word 'reside' should be given the widest meaning.
The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant:
(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.
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, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning.
There are various factors outlined above which indicate that you will not be a resident of Australia for tax purposes. Specifically;
• You will continue to work in Country A on a full time ongoing basis.
• You do not intend to return to Australia to live in the foreseeable future
• You are renting accommodation in Country A and have sold most of your household effects.
• You do not have a place of abode in Australia.
• You have strong sporting interests in Country A.
• You are separated from your spouse.
Based on a consideration of all of the factors outlined above, you will not maintain a strong continuity of association with Australia while you are overseas. You do not intend to return to Australia to live in Australia in the foreseeable future.
Therefore, you will not be residing in Australia in accordance with the ordinary meaning of the word.
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 they have a permanent place of abode outside of Australia.
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.
The expression permanent 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 persons 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 the person intends to live for the rest of his or her life. It should be contrasted with a temporary or transitory place of abode outside of Australia.
IT 2650 outlines some of the factors considered relevant in determining a persons place of abode. These are summarised at paragraph five in the ruling as:
• the intended and actual length of the individuals stay in the overseas country (a period of two years or more in a country would generally be regarded as a substantial period)
• any intention either to return to Australia at some definite point in time or to travel to another country the establishment of a home outside of Australia
• the abandonment of any residence of place of abode the individual may have had in Australia
• the duration and continuity of the individuals presence in the overseas country, and
• the durability of association that the individual has with a particular place in Australia.
You departed Australia for Country A where you intend to stay and work indefinitely.
You were living in rented accommodation in Australia.
You are living in rented accommodation in Country A.
You have moved the majority of your personal possessions to Country A.
As it is your intention to remain in Country A indefinitely and you have an employment pass that allows you to remain there for one year until renewal, at which time you intend to extend it, it is considered that you have acquired a new domicile of choice in Country A. As your domicile is not in Australia, the domicile test does not apply to deem you a resident of Australia for tax purposes from the time you moved to Country A.
It is noted that even if it was considered that your domicile remained in Australia, you have established a permanent place of abode in Country A. Therefore, the permanent place of abode exclusion would also prevent the domicile test being met.
The 183-day test
Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.
Although you exceed the 183 days living in Australia your usual place of abode is outside Australia and you do not intend to return to 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).
As you are not nor have been a Commonwealth Government employee contributing to the PSS or CSS schemes, you are not considered to be a resident of Australia under the superannuation test.
Conclusion.
You are not intending to return to Australia to live. You have established a new domicile of choice in Country A. Although you meet the 183 day test the commissioner is satisfied that your usual place of abode is outside of Australia. You do not meet the superannuation test.
You are therefore not a resident for tax purposes in Australia.