Explanatory Memorandum(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)
Chapter 10 Definition of "Resident" or "Resident of Australia"
Clauses: 2 and 4
Amend definition "resident" or "resident of Australia" to include as residents Commonwealth public servants who are covered by the new Public Sector Superannuation Scheme (PSS).
10.1. A technical amendment is to be made to the definition of "resident" or "resident of Australia" to include as residents Commonwealth public servants who are covered by the new Public Sector Superannuation Scheme (PSS). Their spouses and children under 16 years of age are also treated as residents.
10.2. The existing definition of "resident" or "resident of Australia" contained in subsection 6(1) of the Act, so far as it applies to individuals, prescribes four tests of residency.
10.3. The four tests are:-
- residence according to ordinary concepts;
- the domicile test;
- the 183 days test; and*
- the Commonwealth superannuation test.
10.4. In determining whether or not a natural person is a resident of Australia, the starting point is always whether the individual in question resides in Australia within the ordinary meaning of that expression. However, the satisfaction of any one test is sufficient to render an individual a resident of Australia for Australian income tax purposes.
10.5. The Commonwealth superannuation test (subparagraph 6(1)(a)(iii) of the ITAA) was inserted into the Act in 1939 to include all Commonwealth public servants as residents. This was done by treating as a resident a person who contributes to the Commonwealth Superannuation Scheme (CSS). The spouse or child under 16 of a person who contributes to the CSS is also treated as a resident.
10.6. The PSS was introduced on 1 July 1990 as a consequence of the passage of the Superannuation Act 1990. The amendment will treat Commonwealth public servants who are members of the PSS in the same way as they would have been treated had they been members of the CSS. A spouse or a child under 16 years of age of a member of the PSS scheme will also be treated as a resident. [Clause 4]
10.7. Under the Commonwealth superannuation test, members of the CSS were treated as residents of Australia even though they may have been posted overseas for a period of time that would otherwise cause them to be considered as non-residents of Australia. The same arrangements will apply to members of the PSS.
10.8. The amendment is to take effect from 1 July 1990 as it is consequential to the introduction of the PSS and gives effect to what has been long accepted as a test of residence in Australia.
Clause 4: Extends the operation of subparagraph 6(a)(iii) to include a member of the PSS scheme.
Clause 2: Specifies the commencement date.