Edited version of your private ruling

Authorisation Number: 1012519936119

Disclaimer

You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.

The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.

The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Ruling

Subject: residency

Question and Answer:

Are you an Australian resident for taxation purposes?

No

This ruling applies for the following periods:

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You are a citizen of Australia.

Your country of origin is Australia.

Prior to moving to xxx in xxx you lived in a house you owned in Australia.

You left Australia to commence permanent work in xxx on xxx.

You hold an employment visa in xxx. This allows you to remain in xxx for xxx at a time and is renewed annually based on employment contracts and providing evidence of payment of taxes.

The purpose of your visit overseas was to undertake a permanent employment contact with an xxx employer.

You intend to reside overseas permanently, this intention was formed prior to your departure from Australia.

Your current contract provides you with up to xx weeks annual leave as you work on a xx week. Your employer recognises that whilst on leave you continue to support your staff in xxx.

Whilst you are on leave you may be required to return to xxx immediately, you try to travel back to Australia for x weeks at a time x times a year to visit your family.

You live in an apartment which is leased by your employer, as you are a foreigner you are not able to own property and to rent you must pay at least xx rent in advance. It is therefore usual for employers to sign the lease.

On xxx the company you work for relocated you and your spouse to xxx to undertake a project; you will be located there until the project is completed when you will move back to xxx.

The apartment in xxx is still available for your use and you travel back to xxx regularly to support the xxx office.

It is intended that you will return to xxx in mid to late xxx where you will remain permanently.

You have a bank account in xxx.

You have retained your bank accounts in Australia. You kept this account to pay your mortgage and retain your credit cards.

You hold a mutual fund invested in the xxx economy to the value of approximately $xx

You hold a provident fund with your employer which holds approximately $xx.

Before you left Australia you lived in a house that you owned jointly with your spouse.

When you left you considered it to be a bad climate to sell the property you owned, you chose to rent the property to your daughter and her friends at a nominal rate of rent.

History of residence

· You worked in Australia until xxx,

· You worked in xxx from xxx to xxx,

· You returned to Australia from xxx until xxx (including some contract work in xxx in xxx)

· You commenced full time work in xxx on xxx and you have continued to work for the same company

· xxx you were transferred to xxx and will return to xxx once the assignment in xxx is complete.

When you enter and leave Australia you select the 'Visitor or temporary entrant' option. You include the house that you own, where your relative is currently living with their friends, as your intended address whilst in Australia.

You have never applied for permanent residence in xxx, this is because you are only able to apply for residence when you have lived in xxx for xxx, and you are not yet eligible.

Your spouse travels back to Australia with you when you visit.

Your income in xxx is subject to xxx tax laws, income is reported and any applicable tax will be paid.

Although you were a member of the CSS you no longer hold a government position and are not eligible to contribute to the fund.

Your spouse has not been a member of the CSS or PSS.

Relevant legislative provisions

Section 6-5 of the Income Tax Assessment Act 1997

Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

Residency

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 (ordinary concepts 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.  Where it is determined that a taxpayer 'resides in Australia' in accordance with the first test, there is no requirement to consider the other tests. The other three tests operate to broaden the definition of resident beyond the resides test.

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 Taxation Ruling TR 98/17 residency status of individuals who enter Australia, and Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia.

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

(i) Physical presence in Australia

A person does not necessarily cease to be a resident because he or she is physically absent from Australia.

In relation to this the AAT has stated that:

"Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. 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."

You lived in Australia until xxx when you moved to xxx where you remained until xxx. You lived in Australia from xxx until xxx when you moved to xxx and your spouse joined you in xxx. You have returned to Australia during your holidays to visit your family. You try and return to Australia for a period of approximately xxx a year.

(ii) Nationality

The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case.

You are an Australian Citizen.

(iii) History of residence

· You worked in Australia until xxx,

· You worked in xxx from xxx to xxx,

· You returned to Australia from xxx until xxx (including some contract work in xxx in xxx)

· You commenced full time work in xxx on specific date in xxxx and you have continued to work for the same company

· xxx you were transferred to xxx and will return to xxx once the assignment in xxx is complete.

(iv) Habits and "mode of life"

The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who leaves Australia.

"Where the day to day behaviour of individuals, considered over time, is relatively similar to their behaviour before entering Australia, they are likely to be regarded as residing here. Even when their behaviour over time is different from their behaviour before entering Australia, they are likely to be regarded as residing here, when the facts of their presence indicate a routine establishing they are living in Australia." (TR 98/17).

You have been living and working xxx for the past xx years with your spouse. You have recently been relocated to xxx by your employer and believe that you will return to xxx in mid to late xxx.

(v) Frequency, regularity and duration of visits to Australia

Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country.

Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia.

You were living in Australia from xxx until you left in xxx.

You have been and intend to return to Australia during your annual leave each year to visit your relatives. This will be for periods of xxx a year.

(vi) Purpose of visits to or absences from Australia

You are living in xxx as you have an employment contact that you believe will be extended indefinitely.

When you left Australia you intended to leave indefinitely, however, you have and intend to continue to return to Australia to visit your family.

(vii) Family and business ties to Australia and the overseas country or countries

Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident.

Family

Your spouse initially remained in Australia when you left to take care of your children who were attending university. They joined you in xxx in xxx. Your adult children live in Australia as does your xx who is in a nursing home.

Business or economic

· You have full time employment in xxx.

· You have investment funds in xxx.

· You have bank accounts in Australia which you maintain to allow you to pay your mortgage and retain your credit cards, as you are unable to obtain a credit card in India as they are not available to foreigners.

Assets

· You own a property in Australia which was your family home before you left. This property is now being rented (furnished) at a nominal rate by your adult child and friends.

· You own a car which you garage at your property where your child is living.

(viii) Maintenance of Place of abode

The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer.

When you left Australia you took your personal effects with you to xxx. You left your property fully furnished and your car is also available for your use when you return to Australia.

Summary

As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

There are some factors above which would indicate that you have not ceased to be a resident of Australia, including

· your physical presence in Australia for part of each income year,

· the maintenance of an Australian property in which your relative resides at nominal rent,

· you retained your car when you left and you still hold your Australian credit cards and bank accounts, and

· you return to Australia approximately xxx periods.

Equally, however there are a number of factors which support the finding that you are not a resident of Australia.

· you live with your spouse in accommodation of which you have sole use,

· you have an ongoing permanent employment contract in xxx,

· although you are currently working in xxx your income is subject to xxx tax laws and your accommodation in xxx is still available for your use during this time,

· when you left Australia you intended to do so permanently,

· you have significant investments in xxx, and

· when you enter and leave Australia you select 'visitor or temporary entrant' on your incoming and outgoing passenger cards.

Based on a consideration of all of the factors outlined above, it is concluded that you did not 'reside' in Australia in accordance with the ordinary meaning of the word from xxx when you moved to xxx.

Other residency tests

Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the domicile and permanent place of abode test, 183 day test and the superannuation fund test.

Domicile and permanent place of abode

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

IT 2650 states that:

Persons leaving Australia temporarily would generally be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. 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 e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice.

Application to the your circumstances

As you are an Australia citizen and you have not taken steps to take on a new domicile of choice therefore your domicile is Australia.

As you have an Australian domicile you will be a resident of Australia unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia.

Permanent place of abode

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.

IT 2650 sets out a number of factors established by Court and Tribunal decisions which assist in determining a taxpayer's permanent place of abode;

i. the intended and actual length of the taxpayer's stay in the overseas country;

ii. 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;

iii. 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;

iv. whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

v. the duration and continuity of the taxpayer's presence in the overseas country; and

vi. 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.

As with the factors under the resides test not one single factor is decisive and the weight given to each factor depends on individual circumstances.

Consideration of these factors

· when you left Australia you did so with the intention of remaining overseas permanently,

· you have been in xxx for xx years so far and although your visa is only renewed annually you have a permanent employment contract,

· you live with your spouse in employer provided accommodation, this accommodation is for your sole use and remains available to you whilst you carry out your role in xxx,

· you have a house in Australia however this is being rented out by your relative and friends,

· you have significant investments in xxx, and

· when you enter and leave Australia you select 'visitor or temporary entrant' on your incoming and outgoing passenger cards.

The Commissioner is satisfied that you have established a permanent place of abode outside of Australia. You are not a resident of Australia under the domicile test.

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 will not be in Australia for a period of 183 days during the relevant income years this test is not relevant to your circumstances.

Superannuation fund tests

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.

Although you were a member of the CSS you no longer hold a government position and are not eligible to contribute to the fund.

Your spouse has not been a member of the CSS or PSS.

As neither you nor your spouse are eligible to contribute to the PSS or CSS you are not a resident under this test.

Conclusion

You are not a resident of Australia under any of the tests of residency.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).