Edited version of private advice

Authorisation Number: 1051604179669

Date of advice: 11 November 2019

Ruling

Subject: Residency status

Question

Are you a resident of Australia for taxation purposes?

Answer

Yes.

This ruling relates to the following periods

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on

1 July 20XX

Relevant facts

You were born in Australia.

You hold a country A passport.

Your spouse has an employment contract in country B.

Your spouse's employer provided accommodation for one month as part of the moving package. No further living assistance is being received.

Your spouse arrived in country B and commenced employment soon after. You arrived a few weeks later.

Your spouse's position in Australia is being held while overseas.

Your intention is to live in country B for the full period.

Your main residence in Australia will be rented out while living in country B. Your household items and furniture and cars have been placed in storage.

Your rental property in Australia will continue to be rented out while in country B.

You will continue to perform work for an Australian business for a short period of time when first in country B. You may have some continued involvement in the business while in country B. When you return to Australia, you will return to your current full-time employment arrangement.

Your spouse's employer paid for her visa fees and a tourist visa for you and your child. Your spouse's visa was issued for two years. Your six month tourist visa was issued while your application for a country B work visa is being processed.

Your child has been enrolled in a day-care facility for some days a week.

Your Australian bank accounts will remain open as the accounts are linked to mortgages on properties.

Mail will be re-directed to your country B address once you have a lease arrangement.

You intend to visit friends and family in Australia during the period for short term holidays.

Centrelink will be notified of your departure. You are also planning to notify the Australian Electoral Commission and Medicare of your departure.

You cancelled your private health insurance for two years only.

You do not have extended family in country B. The only country B asset you have is a car which was recently purchased. You plan to sell the car at the conclusion of the stay.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1

Income Tax Assessment Act 1936 subsection 6(1)

International Tax Agreements Act 1953 section 4

Reasons for decision

Residency

Residency status is a question of fact.

The term Australian resident is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to mean a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

Subsection 6(1) of the ITAA 1936 provides four tests to determine whether a person is a resident of Australia for income tax purposes. These tests are:

·         the resides test;

·         the domicile and permanent place of abode test;

·         the 183 day test; and

·         the Commonwealth superannuation fund 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 considered to be a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests.

The resides test

The Macquarie Dictionary defines reside as to dwell permanently or for a considerable time, have ones abode for a time.

The Shorter Oxford English Dictionary defines reside as to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

As a general concept, residence includes two elements: physical presence and the intention to treat the place as home. The period of physical presence in Australia is not by itself decisive when determining whether an individual resides here. All the facts and circumstances that describe an individual's behaviour in Australia are relevant in determining the residency status. No single factor is necessarily decisive. The following factors are useful when determining whether a person is residing in Australia:

·         intention or purpose of presence,

·         family and/or employment ties,

·         maintenance and location of assets, and

·         social and living arrangements.

Recent case law decisions have considered the following factors are also relevant in determining whether a person is an Australian resident for taxation purposes:

·         physical presence in Australia

·         nationality

·         history of residence and movements

·         habits and mode of life

·         frequency, regularity and duration of visits to Australia

·         purpose of visits to or absences from Australia

·         family and business ties to different countries and

·         maintenance of place of abode.

Residence was discussed in Joachim v FCT 2002 ATC 2088. In that case it was highlighted that the test is whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.

The resides test was also considered in Iyengar v FCT 2011 ATC 10-222. In that case, the taxpayer was considered to be residing in Australia even though he had a two year work contract to work overseas and only returned to Australia twice in that time. He was in Australia for a period of 14 days and then later for a period of 10 days during that time. He intended to return to Australia after the contract finished and left his personal effects in Australia. It was highlighted that the term 'reside' should be given a wide meaning and that a person does not necessarily cease to be a resident because they are physically absent. The test is whether the person has retained a continuity of association with that place. Iyengar had the required continuity of association with Australia and was considered a resident under the resides test.

In your case, your spouse has a work contract in country B and you intend to return to Australia after. You have a home and job to return to in Australia. You have maintained your household items, furniture, cars and Australian bank accounts. Even though you and your family will be living in country B for a period, it is considered that you have retained a continuity of association with Australia.

Based on the factors listed above and your full circumstances, we consider that you satisfy the 'resides test' and are a resident of Australia under this test for the period.

As you satisfy the 'resides test', it is not necessary to consider the other three tests.