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Edited version of private ruling

Authorisation Number: 1011567914402

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Ruling

Subject: Residency - country A

Are you a resident of Australia for taxation purposes while you were living in country A?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2008

Relevant facts

You are a citizen of Australia.

You left Australia to teach in country A.

You have been working in country A for over eight months in a year.

You are currently on a special leave from Australian Government Department.

You lived in employer provided accommodation in country A.

You have your superannuation in Australia.

You return to Australia for a period of three to four months each year.

You have strong ties with your family and friends in Australia.

You have a permanent place to live in Australia. You reside in that residence when in Australia.

You stated that your economic ties are with Australia.

You have a bank account in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Section 995-1(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 first two tests are examined in detail in Taxation Ruling IT 2650.

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 for tax purposes if they satisfy 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; having 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'.

As you were not physically present in Australia during 2010 income year, you are not considered to be residing in Australia.

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.

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 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.

In your case, you stated that you intended to reside in country A to work as a teacher and then return to Australia. As you have not decided to live in country A indefinitely, you retain your Australian domicile.

Although you work as a teacher in country A, your association with Australia through your assets and family in Australia is more significant for the following reasons:

Based on these facts, it has been determined that you have not established a permanent place of abode in country A. Therefore, you are deemed to be a resident under the domicile test.

Your resident status

As you are deemed to be an Australian resident under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936, you are considered to be an Australian resident while you were living in country A.

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