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Edited version of private ruling
Authorisation Number: 1011520554437
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Ruling
Subject: Residency - leaving Australia
Question
Are you an Australian resident for income tax purposes?
Answers
Yes.
This ruling applies for the following period
Year ended 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commenced on
1 July 2009
Relevant facts
You are a citizen of Australia.
Your country of origin is Australia.
You departed Australia to live and work in Country A. You have a X year work (residence) permit.
You are issued with a revised employment contract.
Your employment contract has changed from rotational to residential, that has changed your employment entitlements.
Your new contract entails that,
- you are expected to work the hours that are reasonable necessary to achieve the required performance of your job, payment for which has been included in your remuneration
- your working hours are X hours per day with one hour break per working day and your normal working schedule requires you to work Y days per week
- your employer is responsible to cover the cost of obtaining the necessary residence permits
- you are provided with accommodation and meals on site and stay in a unit whilst at work
- several calendar days paid leave per annum (on residential status) and spent your leave in Country A or Country B when not in Australia
- an economy class air travel,
- a number of leave flights
- you may use the monetary value of these flights for the purpose of flying to any destination of your choice
- your employer considers your point of origin to be Australia for leave and repatriation purposes.
Your old contract entails the following,
- your work cycle was several weeks on site and several weeks off site
- your roster day off were classed as Rest and Recreation leave
- you were not required to work when off site
- you were on call 24 hours a day, seven days a week for 365 days of the year
- you resided mostly on the site and rented
- You may continue to live in Country A indefinitely depending on the stability of the country and work environment.
- You stated you made several trips each mostly ranging from several weeks to Australia to sort out your tax situations.
- You have no plans to make any further trips to Australia in near future.
You stated
- you are a resident of Country A
- you do not have any assets in Country A
- you pay several thousands of dollars rent per year upfront in Country A
- your decision not to open a bank account in Country A based on Country A's law not to allow to take any money out of the country
- you cannot apply for permanent residency in Country A for several years
- you can buy a building in Country A but never own the land unless you became a citizen or have a business partner
- you can not become a citizen of Country A for several years
- you are investigating a number of business and investment options in Country A
- you have no intension to come to Australia to live or work
- You have a several investments including properties in Australia
- you have notified the Australian Tax office in regards to your investment and will update them once your non-resident status is confirmed
- Your income is paid directly into your Australian bank account.
- You have a bank account in Country C.
- When you worked in Australia you lived in accommodation provided by your employer and also resided with your mother when visiting the state she lives in.
- Your name is on the loan and title of a property that your mother resides in as you and your sibling bought the place for her to reside.
- You have a rental property in Australia that is being rented out.
- You have bank accounts, loans and visa cards in Australia.
- You stated you own a business in Australia which you purchased for your mother. You stated you do not have an active part in the business although the activity is shown in your income tax returns.
- You are considering completing a diploma via correspondence in Australia.
- You are single and none of your family accompanied you overseas.
- You stated you consider the people in a country you work in close vicinity to be your family.
- You do not have any social or sporting connection in Country A. You are looking into joining few sporting clubs in Country A to substantiate your sporting connections.
- You are not and were not a Commonwealth Government of Australia employee.
- There is no tax treaty between Australia and Country A.
- You pay taxes in Country A.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
The terms 'resident' and 'resident of Australia', in regard to an individual, are described in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition includes four tests to assist in determining whether you are a resident of Australia for income tax purposes.
These tests are:
1. The resides test
2. The domicile test
3. The 183 day test
4. The superannuation 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 to be a resident of Australia for tax purposes if you meet the conditions of one of the other three tests.
1. The resides test
The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.
As you are residing in Country A since you left Australia to take on employment in Country A, therefore you are not considered to be residing in Australia.
2. The domicile test
In order to show that a new domicile of choice in a country outside Australia has been adopted, you must be able to prove an intention to make your home indefinitely in that country.
A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which you intend to live for the rest of your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.
Residency for income tax purposes is a question of facts and it changes as the facts change. As the facts submitted by you show no evidence of intention to make your home indefinitely outside Australia, you are considered to have maintained your Australian domicile.
In addition, your associations with Australia are considered to be more significant for the following reasons:
- your country of origin is Australia and you are a citizen of Australia
- you have your immediate family in Australia
- you own a house, a business and several other investments in Australia, a mere statement of not being actively involved in these possessions is not sufficient to ignore your assets
- you also have a rental property in Australia which is rented out
- you have bank accounts, loans and visa cards in Australia
- your income from Country A is deposited in an Australian bank account
- You are considering completing a diploma via correspondence in Australia.
- you made several trips to Australia since first departing for Country A
- during your visits to Australia you resided with your mother on occasions
- you stated you have notified the Australian Tax office in regards to your investments and will notify them once your non-resident status is confirmed
- you stated you have no intension to come to Australia to live or work
- you employer in Country A considers your point of origin to be Australia for leave and repatriation purposes
- your employer is responsible to cover the cost of obtaining the necessary residence permits for your employment requirements
- you are provided with accommodation and meals on site
- you stated you pay several thousands of dollars per year upfront rent and stay in a unit whilst employed in Country A
- you do not have any assets in Country A but you are investigating a number of business and investment options in Country A
you have an option to:
- buy a land in Country A
- invest in Country A
- open a bank account in Country A, but you did not take these opportunities due to your personal choice
- You may continue to live in Country A indefinitely depending on the stability of Country A
Although you stated you do not have any active ownership in your investments, business and property, the fact that you are the owner of these assets cannot be ignored. Based on these facts, it is considered that your association with Australia is more significant compared to Country A and your current facts confirm that you have not established a permanent place of abode in Country A. You are therefore considered to be a resident of Australia for tax purposes under the domicile test.
Your residency status
As you are deemed to be a resident of Australia under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936 there is no need to examine the remaining tests. Therefore, you remained an Australian resident for taxation purposes during your employment in Country A.
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