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Edited version of private ruling

Authorisation Number: 1011497783144

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Ruling

Subject: Residency

Question:

Were you an Australian resident for income tax purposes for the years ended 30 June 2008 and 30 June 2009?

Answer:

No.

This ruling applies for the following period:

Year ended 30 June 2008

Year ended 30 June 2009

The scheme commenced on:

1 July 2008

Relevant facts

You are an Australian and Country A citizen.

You owned a house in Australia that you resided in with your family.

In the relevant year, you began employment with a Commonwealth of Australia government employer.

Some time later, you left Australia for Country A to take up a job offer. You did not resign from your position in Australia, instead you took leave without pay until you finally resigned.

Around the time you left Australia your spouse and children relocated from Australia to join you in Country A.

From when you arrived in Country A, you were renting accommodation, until you bought a house in Country A. You began to reside with your family in this house.

From some time in the relevant income years, you were transferred to Country B, where you temporarily relocated with your spouse and children. You were renting accommodation during this period of time you spent in Country B.

After this, your spouse returned to Australia along with some of your children. You continued to work and reside in Country A.

In Country A, you have social contacts through friends. You also have a bank account.

You only returned to Australia for short vacations to see your family. They also travelled to Country A to visit you.

You were later offered a job in Australia. You then returned to Australia some time later in to take up that position after resigning from your Country A job. You took this new job offer on a specific contract.

You still maintained your house in Country A, which is currently still deriving rental income.

At the same time you returned to Australia, you sold your family home and bought another one which has since become your family home.

In the relevant income year, neither you nor your spouse was an eligible member of a commonwealth superannuation scheme.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1) and

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

An Australian resident is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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. These tests are:

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 if they meet the conditions of one of the other three tests.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), 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'.

For the period that you were physically present in Country A, you were not considered to be residing in Australia according to ordinary concepts 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.

Domicile

Generally, 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.

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.

In your case, from some time in the relevant income year when your spouse and some children decided to return to Australia, you still maintained that association with Australia. However, your association with Country A was more significant as:

Based on these facts, it is therefore considered that you have established and maintained a permanent place of abode in Country A for the years ended 30 June 2008 and 30 June 2009.

The 183-day test

This test does not apply to you as it has been identified that your permanent place of abode was in Country A.

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.

In your case, in the relevant income year you were not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

Your residency status

As you are not deemed to be an Australian resident for income tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident for the years ended 30 June 2008 and 30 June 2009.

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