Edited version of private advice

Authorisation Number: 1051632204544

Date of advice: 18 February 2020

Ruling

Subject: Residency for tax purposes, in Australia to spend time with a sick relative and rented an apartment

Question

Were you an Australian resident for tax purposes during the 2016-17 income year?

Answer

Yes

This ruling applies for the following period:

Year ending 30 June 2017

The scheme commences on:

1 July 2016

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a citizen of Australia and in 200X you moved to Country B to work. You have maintained accommodation, furniture and assets in the other country.

You and your spouse own rental properties in Australia and part own another property which is the residence of the other part owners. You own a car which you purchased for use when in Australia and it is garaged at your relative's home.

A relative of yours became ill and you returned to Australia to care for them and signed a lease for an apartment. The lease was later extended as you continued to support your relative until they passed way.

During this time your spouse remained in Country B and you maintained your apartment and other personal effects while remaining employed in that country.

You have retained your Australian Superannuation fund membership and have made several personal contributions.

Although you have bank accounts in both countries, the bulk of your savings and investments are held in Australia.

As it is a requirement for your overseas employment, you have maintained your membership with a professional institute in Australia, along with a life insurance policy, and an income protection insurance policy.

You obtained a Country B driver's license shortly after re-locating there and it is the only current license you hold.

You travelled back and forth between both countries to visit your spouse and carry out your employment responsibilities during this period.

The lease on your apartment in Australia expired and you returned to the Country B where you continue to live and work.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 995-1

Income Tax Assessment Act 1936 subsection 6(1)

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 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.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The following factors are taken into consideration in relation to whether a taxpayer is 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 with Australia compared to the foreign country concerned;

(viii) maintenance of a place of abode.

Weight given to each factor varies with individual circumstances and no single factor is necessarily decisive.

In your case, you had family ties in Australia which influenced your decision to return here for a considerable time.

You were physically present in Australia during the 20XX-XX income year and established a residence.

Based on the facts you have provided, we can conclude that you satisfied the resides test for residency.

Accordingly you are a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 during the 20XX income year.