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Edited version of your written advice
Authorisation Number: 1051476907457
Date of advice: 6 March 2019
Ruling
Subject: Residency for taxation purposes
Question 1
Did you acquire a domicile of choice in Territory Z in late 20XX?
Answer
Yes
Under the domicile test, a person is resident in Australia if his or her domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia.
Domicile is a legal concept to be determined according to the Domicile Act 1982 and common law rules. The primary common law rule is that a person acquires a domicile of origin at birth. A person retains the domicile of origin unless and until he or she acquires a domicile of choice in another country, or until he or she acquires another domicile by operation of law. In practice, an individual who has always lived in Australia will retain a domicile here when absent overseas, unless they choose to permanently migrate to another country.
Based on the facts you have provided, we can conclude that you acquired a domicile of choice in Territory Z during late 20XX.
Question 2
Have you been a resident of Australia for income tax purposes for any period since 20XX?
Answer
No
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.
Subsection 995-1 of the 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 provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:
● the resides test,
● the domicile test,
● the 183 day test, and
● the superannuation test.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency for any relevant period.
Accordingly you are not a resident of Australia for income tax purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.
This ruling applies for the following period:
Year ending 30 June 2004
Year ending 30 June 2005
Year ending 30 June 2006
Year ending 30 June 2007
Year ending 30 June 2008
Year ending 30 June 2009
Year ending 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on:
1 July 2003
Relevant facts and circumstances
You were born in Australia and are an Australia citizen.
You left Australia with your family in late 20XX.
Since 20XX you have paid tax and continue to pay tax in Territory Z.
You own a property in Australia which you leased out when you moved to Territory Z.
You have lived in rental properties since your arrival in Territory Z.
You have furnished the apartments with your personal possessions.
You could not obtain permanent residency in Territory Z at this time due to their legislative requirements.
In 20XX you became a director and shareholder in Employer Y and subsequently became the director of several companies in the Employer Y structure in Territory Z.
In 20XX you and each member of your family acquired a Permanent Identity Card which also provided permanent residency and right of abode in Territory Z.
In 20XX your spouse and children returned to Australia in order for your children to attend school in Australian education system.
You have a drivers licence for Territory Z.
You do not have a Medicare card or drivers licence in Australia.
You have private health insurance in Territory Z.
You have established social and sporting connections in Territory Z.
You make short, infrequent visits to Australia.
You provide a portion of your annual income towards your family’s education and other expenses.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Income Tax Assessment Act 1997 Subsection 995-1(1)
Domicile Act 1982