Edited version of private advice

Authorisation Number: 1051531450500

Date of advice: 1 July 2019

Ruling

Subject: INTL - residency - leaving Australia

Question 1

Are you a resident of Australia for taxation purposes for the 2014 income year?

Answer

Yes.

Question 2

Are you a resident of Australia for taxation purposes for the 2015, 2016, 2017, 2018 and 2019 income years??

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You were born in Country Y and you are a citizen of Australia and Country Y.

You enter Country Y on a country Y passport.

You and your spouse went overseas for a holiday in the 2014 income year.

Your intention was to be on holiday for 12-18 months.

Your parent became ill and you and your spouse decided to stay with them and look after them.

You formed this intention in XXX 2014.

Your parent's health has declined over the years to the extent that they needs 24 hour care.

You and your spouse have made 1 trip back to Australia in XXX 2019 since leaving Australia in XXXX 2013.

The purpose of this trip was to try and sell your home.

You were not able to sell the home and returned to Country Y in May 2019.

You and your spouse live with your parent in Country Y.

You took clothing and other personal items to Country Y with you.

Your home in Australia was rented out from XX 2013 until XXX 2019.

The property in Australia is currently not being rented.

When the property was rented out you stored the furniture and other items with family.

You and your spouse support your selves with superannuation pensions you're your spouse receives a DVA pension.

You will return to Australia at some stage in the future and resume your residency status.

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 and your spouse initially went overseas for a holiday. You intended on being overseas for 12-18 months on the holiday.

Your parent took sick and you and your spouse made the decision to stay and look after them in July 2014.

You and your spouse have only returned to Australia once since leaving in 2013 and that was in XXX 2019. The purpose of this visit was to sell your home in Australia.

For the period 1 July 2013 to 30 June 2014 you remained a resident of Australia for taxation purposes as you were on holidays.

For the period 1 July 2014 to 30 June 2019 you are not a resident of Australia for taxation purposes as you have not been residing in Australia according to ordinary concepts and your intentions changed from being on holiday to staying with your parent to care for them as they are aging and has declining health.

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 Y. Your domicile of choice 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.

For the period 1 July 2013 to 30 June 2014 the Commissioner is not satisfied that you had a permanent place of abode outside Australia as you and your spouse were on a holiday during this period.

You were a resident of Australia for taxation purposes for the period 1 July 2013 to 30 June 2014.

For the period 1 July 2014 to 30 June 2019 the Commissioner is satisfied that you had a permanent place of abode outside Australia as you changed your intention from being on holiday to supporting your parent through a health issue.

You and your spouse are living with your parent in country Y and their health is declining.

You are not a resident of Australia for taxation purposes for the period 1 July 2014 to 30 June 2019.

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 have not been in Australia for more than 183 days since leaving Australia.

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 were a resident of Australia for taxation purposes from 1 July 2013 until 30 June 2014.

You are not a resident of Australia for taxation purposes from 1 July 2014 to 30 June 2019.

When you return to Australia to live permanently you will resume your residency status in Australia as a resident of Australia for taxation purposes.