Edited version of your written advice

Authorisation Number: 1013084695788

Date of advice: 5 September 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 ended 30 June 2015

The scheme commenced on:

1 July 2014

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 were born in Australia and you are a citizen of Australia.

You work for an employer in Australia.

You were offered a job with the overseas branch of the company which was for two years.

The terms of your contract meant that you can return to the Australian branch at the end of the contract.

You had a work visa for the overseas country.

Your salary is subject to the overseas country withholding tax.

The Australian branch of the company pays your superannuation.

You own a residence in Australia which you rented out for the period of your stay in overseas.

You rent a residence overseas.

You shipped all your belongings overseas.

You have maintained your Australian bank accounts, credit cards, mobile phone, investments and drivers licence.

You have bank and credit card accounts overseas along with a mobile phone, identity and social security cards and other subscriptions.

You have made two short visits to Australia to see your family.

You are single and have no dependants.

You are a resident of the overseas country for tax purposes.

You will return to Australia by the end of the 2016 year and you will have been in overseas for XX months.

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 went overseas for work purposes.

You have only returned to Australia twice to visit family.

You rent a residence overseas.

You are renting your residence out in Australia.

Based on the facts above you have not maintained a connection to Australia according to ordinary concepts.

You are not a resident under this test.

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 satisfied that you have set up a permanent place of abode outside Australia for the following reasons:

• You have gone overseas for work purposes

• You are renting a residence overseas

• You have taken all your belongings overseas

• You are renting your residence out in Australia

• You will return to Australia after being in overseas for XX months

You are not a resident under this test.

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.

You have not been in Australia for more than 183 days since leaving Australia.

You are not a resident under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the 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 are not eligible to contribute to the relevant Commonwealth super fund.

Your residency status

You are not a resident of Australia for taxation purposes.

ATO view documents

Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia