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You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1013122518317

Date of advice: 18 November 2016

Ruling

Subject: Residency

Question 1

Are you an Australian resident for the period you are living in Country A?

Answer 1

No

This ruling applies for the following periods:

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 2015

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.

You left Australia in 20XX to move to Country A for three years.

You have an employment contract in Country A with no end date.

Your current employment entitles you to retirement benefits in Country A.

You have a partner in Country A.

You have a have a working visa that allows you to stay in Country A for three years.

You do not intend to reside in Country A permanently.

You have informed the Australian Electoral Commission that you are departing Australia.

You have suspended your private health insurance.

You do not own any assets in Australia.

You sold your car and donated your furniture and other personal effects.

You have a bank account in Australia.

Your parents live in Australia. You intend to visit them at Christmas time only.

You do not have any other connections in Australia.

Reasons for decision

Summary

You are an Australian resident for tax purposes for the year ended 30 June 20XX until your departure.

From your departure you are a non-resident of Australia for the period of time you reside in Country A.

Detailed reasoning

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 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia. These tests are:

    ● the resides test

    ● the domicile test

    ● the 183 day test

    ● the superannuation test.

The resides 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 you do not reside in Australia according to ordinary concepts, you may still be considered a resident of Australia for tax purposes if you meet the conditions of one of the other three tests.

The ordinary meaning of the word "reside", according to the Shorter Oxford English Dictionary, is to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place.

In your case, you have been residing in Country A from 20XX and obtained permanent full-time work.

Therefore, you are not considered to be residing in Australia according to ordinary concepts and you are not an Australia resident for taxation purposes under this test.

The domicile test

If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

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.

As explained at paragraph 23 of Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia, following factors are taken into consideration regarding a person's permanent place of abode:

    (a) the intended and actual length of the taxpayer's stay in the overseas country;

    (b) whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

    (c) whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

    (d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

    (e) the duration and continuity of the taxpayer's presence in the overseas country; and

    (f) the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

Greater weight is given to factors (c), (e) and (f).

In your case you will be living and working in Country A for three years. You have a partner in Country A that will be residing with permanently.

You will be living in Country A continuously for three years, possibly longer.

You do not have many associations with Australia. You have maintained a bank account however you have informed other Australian departments that you will be living in Country A.

Even though you are an Australia citizen, your behavior indicates your intention to make your home for a significant amount of time in Country A, even if you do not intend to live in Country A permanently. You have therefore established a permanent place of abode outside of Australia.

Consequently, you are not a resident under this test.

The 183-day test

When a person is present in Australia for 183 days during an income year, that person may be considered a resident unless the Commissioner is satisfied that the person's usual place of abode is outside of Australia and the person does not intend to take up residence in Australia.

You will not be spending more than 183 days in Australia from 2016. Therefore, 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 Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. 

You are not a current Commonwealth government employee, and are not a member of the PSS or the CSS.

Therefore, you are not a resident under this test.

Foreign Employment Income

Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident of Australia includes all the ordinary income derived directly or indirectly from all Australian sources during the income year.

The source of income derived from employment is generally the place where the duties or services are performed.

Your employment duties carried on outside of Australia are considered to be sourced out of Australia. Therefore the income derived in relation to such employment is not assessable in Australia under subsection 6-5(3) of the ITAA 1997 as you are a foreign resident.