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Edited version of your written advice
Authorisation Number: 1051374089887
Date of advice: 16 May 2018
Ruling
Subject: Residency for tax purposes
Question 1
Am I an Australian Resident for tax purposes from 1 July 2014 to 30 June 2017?
Answer
No
Question 2
Am I an Australian Resident for tax purposes in the 2017-2018 financial year?
Answer
Yes
This ruling applies for the following periods:
Period ending 30 June 201X
Period ending 30 June 201X
Period ending 30 June 201X
Period ending 30 June 201X
The scheme commences on:
1 July 201X
Relevant facts and circumstances
You were born in Country A
You attended University in Australia.
You returned to Country A after graduation.
You have lived at a permanent address in Country A since 20XX
You worked in Country A for a Swiss company.
You worked for this company until April 201X.
You married in Country A in 20XX
Your wife came to Australia in 201X to complete her PhD under a student visa.
Your eldest child joined her in Australia on a dependent visa in 201X.
You and your family were granted a permanency visa in November 201X.
You remained in Country A to maintain your employment and look after an ill relative.
You terminated your employment with the company in April 201X.
You came to Australia in April 201X to help with your children so your wife can complete her PhD.
You intend to remain in Australia until your wife has completed her PhD
You still maintain property and bank accounts in Country A.
You have not pursue employment in Australia.
You own property and a bank account in Australia.
Your wife and your child were granted Australian citizenship in January 201X by conferral.
Your second child was born in Australia in May 201X.
Relevant legislative provisions
Income Tax Assessment Act 1936 (ITAA 1936)
Income tax Assessment Act 1997 (ITAA 1997)
Reasons for decision
Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax 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:
● the resides test,
● the domicile test,
● the 183 day test, and
● the superannuation 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.
Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the other tests.
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 were living in Country A since 20XX until April 201X; accordingly you were not residing in Australia.
The domicile 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
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.
This intention needs to be demonstrated in a legal manner by way of becoming a permanent resident or citizen of another country, for example.
It is considered that your domicile is in Country A because:
● You have lived on a continuous basis in Country A since you returned from study in Australia in 20XX.
● You deliberately chose to stay in Country A when your wife travelled to Australia for study purposes.
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 nodes not intend to take up residence in Australia.
As you were not present in Australia for more than one-half of the income year you will not be a resident under the 183 day test.
The superannuation test
An individual is still considered to be a resident of Australia if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) of the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.
As you do not meet the above conditions you are not a resident under this test.
Conclusion – your residency status
Based on the facts you have provided, you do not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period 1 July 2014 to 30 June 2017.
Question 2
The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:
● the resides test,
● the domicile test,
● the 183 day test, and
● the superannuation 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.
You have been living in Australia since April 201X; you are part owner of a home in Australia and you have the intention of remaining in Australia until your wife completes her PhD.
You meet the primary test (the resides test) for determining residency and are therefore a resident of Australia for tax purposes from the time you have arrived in Australia.