Edited version of your written advice

Authorisation Number: 1051484678372

Date of advice: 18 March 2019

Ruling

Subject: International - residency – leaving Australia

Question

Are you a resident of Australia for taxation purposes?

Answer

No

This ruling applies for the following period:

Year ended 30 June 2018

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You are not a permanent resident of any other country.

You have been living in Country Y on and off since 20XX.

Between 20XX and 20XX you returned to Australia for 3 months each year to visit family and attend to property maintenance on your investment property.

In 20XX you married a Country Y national and in 20XX you and your spouse had a child.

You returned to Australia in 20XX for X days and since then you have not been back to Australia as often.

You reside in country Y on a retirement visa.

You live in rented accommodation in Country Y which is in both your name and your spouse’s name.

You no longer own any property in Australia.

You have bank accounts in Australia.

You have a bank account in Country Y which is part of your visa conditions.

You decided to stay in Country Y on a permanent basis in the 20XX income year.

You did not return to Australia in the 20XX income year.

You do not have any dependants in Australia.

You and your spouse are not eligible to contribute to the relevant Commonwealth Superannuation funds.

Relevant legislative provisions

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

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.

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 have been living in Country Y on and off since 20XX.

In 20 XX you married a country Y national.

In 20 XX you and your spouse had a child.

You live in rented accommodation in Country Y which is in both your name and your spouses.

You did not return to Australia in the 20 XX income year.

You do not own any property in Australia.

You are not residing in Australia according to ordinary concepts.

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.

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 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 set up a permanent place of abode outside Australia for the following reasons:

● You have married a Country Y national and live with them in Country Y

● You have a child in Country Y

● You have taken personal items to country Y

● You and your spouse rent property in Country Y

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 were not in Australia for more than 183 days in the 20 XX income year.

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 and your spouse are not eligible to contribute to the relevant Commonwealth super fund.

Your residency status

You are not a resident of Australia for taxation purposes in the 20 XX income year.