Edited version of private ruling

Authorisation Number: 1011544221117

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Ruling

1. Are you a resident of Australia for taxation purposes for the period date 1 to date 2?

Yes.

2. Are you a resident of Australia for taxation purposes for the period date 3 to date 4?

No.

This ruling applies for the following period

1 July 2006

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 left Australia for country B.

You commenced a short contract with overseas company in country B.

You resided at an apartment.

You accepted a full time contract with the overseas company in country B this included sponsorship and a residence Visa.

Your resident visa was upgraded and did not require re-submission every year.

Your intention was to stay in country B with your family, so you sold the family home, principal place of residence Australia.

Your spouse and children leave Australia to relocate to country B and reside with you at the serviced apartment.

Your children attend school in country B.

You moved from the apartment when your furniture arrived from Country A to another dwelling where you remained till a later date.

Your spouse purchases an investment property in Australia. The property is leased.

You return to Australia for a temporary visit.

You moved to a permanent residence in country B and signed a lease.

Your contract with the overseas company expires. You and your family stay in country B.

You commenced full time employment with another company in country B. Sponsorship and residence visas for you and your family are transferred to the new company and again do not need to be upgraded on a yearly basis.

You return to Australia for a temporary visit.

Your spouse and children relocate to Australia and reside temporarily in the investment property.

You accompany your family temporarily to Australia and assists in their relocation.

Your children commence school in Australia.

Your spouse commences employment in Australia.

You return to country B to continue your full time employment.

You return temporarily to Australia. Your intention is to stay fully employed in country B and then relocate back to Australia later, if an opportunity opens in Australia.

You have recently moved to an apartment in country B which you share and have a lease.

You have bank accounts in Australia.

You have assets in country B such as bank accounts and a motor vehicle.

You make payments which represent a percentage of your income earnings to insurance.

You are a member of a sports Club, an Association and another Club country B.

You and your spouse are not Commonwealth Government of Australia employees.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Are you an Australian resident for tax purposes?

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 an Australian resident 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 an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other 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 working and staying in country B, you are not considered to be residing in Australia under this test.

2. 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 speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law.

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

You advised from date 1 you left Australia to commence a contract with an overseas company in country B. However, your spouse and children did not join you in country B until date 2, after selling the family home. Therefore, you are considered to have maintained your Australia domicile until date 2.

From date 2 you have established a domicile outside of Country A. Therefore, from date 2 you were not an resident of Country A under the domicile test.

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 persons 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 Country A in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. In your situation:

· you initially had a three month contract

· you had short term accommodation

· your spouse and children move to Country B in date 2

· you have a valid sponsored resident visa in Country B.

· you sold the Country A residence in date 2, and

· are not sure when you would return to Country A.

Based on these facts, you did not establish a permanent place of abode before date 2. Therefore, you are a resident of Country A under the domicile test from date 1 to date 2.

The 183 day test

When 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 do not satisfy this test as you have established a permanent place of abode outside of Australia.

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 member of the PSS or CSS or a spouse of such a person, or a child under 16 of such a person as nor you or your wife have ever been employed by the Commonwealth of Australia. Therefore, you will not be treated as a resident under this test.

Your resident status

You were a resident of Australia under the domicile tests of residency for part of the financial years as in subsection 6(1) of the ITAA 1936.

You were not a resident of Australia under any of the residency tests as in subsection 6(1) of the ITAA 1936, the date that you first established a domicile outside of Australia.

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