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Edited version of your written advice
Authorisation Number: 1013071489878
Date of advice: 15 August 2016
Ruling
Subject: Residency
Yes.
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You intend on accepting a permanent on-ongoing employment contract in Country A.
Your income will be paid into a bank account in Country A.
The commencement date for your position will be in 2016.
You will be leasing a property for your accommodation.
Your dependent will live with you and will attend school in Country A.
Your spouse will remain in Australia and will run the family business.
Your family home in Australia will be maintained.
You are considering selling the business.
Your spouse will travel to Country A to visit every six weeks.
You will travel to Australia as part of your role approximately four to six times a year.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 6-1
Income Tax Assessment Act 1997 Subsection 995-1(1)
Reasons for decision
Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936).
The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:
1. the resides test
2. the domicile test
3. the 183 day test
4. 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.
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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.
The resides test
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 High Court of Australia, in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 (Miller's case) at page 99-100, per Latham CJ, noted the term 'reside' should be given a wide meaning for the purposes of section 6(1) of the ITAA 1936. Similarly, in Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at paragraphs 43 and 44 that the widest meaning should be attributed to the word "reside".
Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.
In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period.
In your case, you have ties to both Australia and Country A.
Although your employment contract is for a permanent role in Country A and your dependant will be attending school over there, the fact that your spouse will remain in Australia to run the family business, the maintenance of the family residence and the maintenance of family ties point to a strong association with Australia.
The wide meaning of the term 'reside' is satisfied and you are a resident of Australia under the resides test.
Summary
Your residency status
As you have passed the resides test, it is not necessary to consider whether you are a resident of Australia under any of the three remaining tests.
You are a resident of Australia for taxation purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.