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Edited version of your written advice
Authorisation Number: 1051295410922
Date of advice: 7 December 2017
Ruling
Subject: Residency
Question
Are you a resident of Australia from late 201A?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 201B
The scheme commences on:
201A
Relevant facts and circumstances
Your country of origin is Australia and you are a citizen of Australia.
You were living and working in Australia before you entered into an employment contract in Country B.
You commenced working in Country B in late 201A.
You entered Country B on a long stay visa and have been granted a residence permit that allows you to live and work in Country B for the duration of your employment.
Your intention on taking up the employment contract was to work in Country B indefinitely. You have no intention of returning to Australia to live in the foreseeable future.
You live in rented accommodation with a two year agreement with a view to extension.
You opened a bank account in Country B for the receipt of salary payments.
You were renting your own accommodation in Australia before you left for Country B.
You do not own any residential property in Australia and your household effects are stored at your parent’s place in Australia.
The only assets you retained in Australia were a bank account where you earn a small amount of interest, you intend to advise the bank of your overseas address.
At the time you left Australia, you did not have a spouse, partner or children.
You did not retain any social or sporting connections in Australia after you left the country.
You are on leave without pay from Company B.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
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 (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 (ordinary concepts) 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'.
The Commissioner may make reference to the following factors in determining whether a taxpayer is 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.
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, there are various factors that indicate that you were not residing in Australia during the year in question, specifically:
● you left Australia with no plans to return at any specific time in the future;
● you ultimately live and work in Country B indefinitely;
● you live in leased accommodation in Country B which is for your own exclusive use; and
● you do not maintain a place of abode in Australia.
Based on the above, you were not residing in Australia during the year in question.
Therefore, you were not a resident of Australia under the resides test of residency for the period of the ruling.
The domicile and permanent place of abode test
Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.
Domicile
A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned.
In your case, your domicile of origin is Australia and there is no evidence to suggest that you changed your domicile to Country B while you are based in that country.
Therefore, your domicile is still Australia during the relevant period.
Permanent place of abode
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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.
It is clear from the case law that a person’s permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.
In your case, there are various factors that indicate that you had a permanent place of abode outside Australia from 1 November 2016:
● you have lived and worked in Country B since 1 November 2016 ;
● you live in leased accommodation in Country B which is for your own exclusive use; and
● you do not maintain a place of abode in Australia.
Based on the above, the Commissioner is satisfied you had a permanent place of abode outside Australia during the relevant period.
Therefore, you were not a resident of Australia under the domicile and permanent place of abode test of residency for the period of the ruling.
The 183 day test
Under the 183 day test, a person is a resident of Australia if they are present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here.
You were not a resident of Australia under this test as you were not present in Australia for more than 183 days during the relevant period.
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.
You were not a resident under this test for the relevant year.
Your residency status
You are not an Australian resident for taxation purposes from late 201A. On your 201B income tax return you will complete A2 part-year tax-free threshold with the date you left Australia and how many months you were eligible for the threshold.