Edited version of your written advice

Authorisation Number: 1013139764552

Date of advice: 16 December 2016

Ruling

Subject: Residency

Question 1

Are you an Australian resident for income tax purposes?

Answer

No

Question 2

Are you required to include your Country X's income in your Australian income tax return?

Answer

No

This ruling applies for the following period:

Year ended 30 June 2016

The scheme commences on:

1 July 2016

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You moved to Country X on 1 July 2015.

You have accepted an on-going full-time position in Country X.

You intend to stay in Country X permanently.

You were granted a visa of Country X.

Your visa is sponsored by your employer.

You are required to re-apply for your visa every n years.

Your visa becomes invalid if you leave Country X for more than m months.

The purpose for the visit was to attend a specific ceremony.

You have informed the Australian Electoral Commissions and Medicare that you were departing Australia.

You cancelled your private health insurance.

When completing incoming and outgoing passenger cards, you stated your residency status was visitor or temporary entrant and left your parents' address on these documents.

You receive an accommodation allowance from your employer.

You live in a rental accommodation in Country X.

The rental agreement is for one year.

The rental agreement is not under your name.

You share the accommodation with other flat mates.

The accommodation is fully furnished.

You have bought personal belongings to the accommodation.

You were renting in Australia prior to leaving.

You sold or donated your household items in Australia prior to your departure.

You shipped your personal belongings to Country X.

You have an investment property in Australia.

You have a bank account in Australia.

You have advised the bank that you were departing Australia.

You have a bank account and a motor vehicle in Country X.

You do not have a spouse.

You are not maintaining professional, social or sporting connections with Australia.

You have established professional, social, or sporting connections in Country X.

You are a member of various sporting groups in Country X.

You obtained a Country X's Driver's licence.

You are not a Commonwealth Government of Australia employee for superannuation purposes.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Subsection 995-1(1)

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation purposes as a person who is a resident of Australia for the purposes 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 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 Taxation Ruing IT 2650 - Income tax: residency - permanent place of abode outside Australia 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.

In your case, you have accepted an on-going full-time position in Country X. You intend to stay in the Country X permanently. You live in a rental accommodation in Country X. You have established professional, social, or sporting connections in Country X. You sold or donated your household items in Australia prior to your departure. You shipped your personal belongings to in Country X. You returned to Australia on 30 June 20XX after first leaving and departed again later in 20XX.The purpose for the visit was to attend a specific ceremony.

Therefore, 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.

Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

In your case, you were born in Australia and you are a citizen of Australia; therefore, 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 a permanent place of abode outside Australia from 1 July 20WW for the following reasons:

● You have accepted a full-time position in Country X.

● Your employment is on-going.

● You left Australia permanently.

● You live in a rental accommodation in Country X.

Therefore, 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 did not stay in Australia for more than 183 days for the period from 1 July 20WW to 30 June 20XX. 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 a contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. You will not be treated as a resident under this test.

Your residency status

Based on the facts you have provided, you are not a resident of Australia for income tax purposes for the period from 1 July 20WW to 30 June 20XX.

Foreign income

Subsection 6-5(3) of the ITAA 1997 provides that if you are a foreign resident, your assessable income includes:

a) The ordinary income you derived directly or indirectly from all Australian sources during the income year; and

b) Other ordinary income that a provision includes in your assessable income for the income year on some basis other than having an Australian source.

Since you are not a resident of Australia for income tax purposes for the period from 1 July 20WW to 30 June 20XX, you are not required to include your Country X's income in your Australian income tax return.