| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051199163679
Date of advice: 6 March 2017
Ruling
Subject: Residency
Question and answer
Are you a resident of Australia for taxation purposes?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commenced on:
1 July 2015
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 are a citizen of Australia and country A although country D is your country of origin.
You moved to country B on #.
You moved overseas to take up an indefinite work transfer starting on #.
Your spouse did not move with you due to your child's schooling.
Your spouse will join you to live in country B when your child finishes schooling.
You have entered country B on a business visa while you made an application for a residency permit.
The residency permit allows you to stay permanently but requires annual renewal.
You do not intend returning to Australia to live.
You sub-lease part of an apartment in country B
In Australia you own investment properties, a bank account, some shares, and motor vehicles.
You have a bank account in country B.
You have a family home in Australia which is being leased while you are overseas.
Your spouse and child live in a rental property in Australia which is in both you and your spouse's names.
You have returned to Australia on one occasion since you left to visit family and attend to personal business.
You have removed your name form the electoral role.
You have not advised financial institutions or companies that you have investments with that you are a foreign resident.
You financially support your family in Australia.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 995-1(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.
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 moved overseas due to a job transfer.
● Your spouse and children remain in Australia
● You intend to live and work in country B indefinitely
● You have a residency permit which is renewable on a yearly basis
● You financially support your family in Australia.
Based on the facts above for the period you are working in country B and your spouse and child remain in Australia, you will remain a resident of Australia for taxation purposes, as you will maintain a continuity of association with Australia.
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 country D and Australia is your current domicile of choice.
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 have set up a permanent place of abode outside Australia for the following reasons:
● You live in sub-leased accommodation in country B.
● Your spouse and family remain in Australia
● You have a family home you can return to in Australia.
You are a resident under this test.
Your residency status
You are a resident of Australia for taxation purposes for the period you are in country B and your spouse and child remain in Australia.