Edited version of private ruling

Authorisation Number: 1011582216309

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Ruling

Subject: Residency

Were you a resident of Australia for tax purposes?

Yes.

This ruling applies for the following period:

Year ending 30 June 2010

Year ending 30 June 2011

The scheme commenced on:

1 July 2009

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 are not an Australian citizen.

You left Australia to return to country A to look after your terminally ill relative.

You stayed with your relative and paid board while you were in country A.

Your partner left their job and went to country A with you.

Your relative passed away and you stayed in country A to support your family.

You maintained your residence and a rental property in Australia when you were in country A.

You started working in country A to earn money to help support your family and to help make payments on your Australian residence and rental property.

You returned to Australia.

You were a resident of Australia for taxation purposes prior to going to country A.

Relevant legislative provisions

Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

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 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 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 were living outside of Australia you are not considered to have been residing in Australia.

2. The domicile test

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 for a domicile of choice to be acquired, there needs to be both a change of residence and the intention of residing in the new country permanently or at least indefinitely. The requisite intention without a change of residence, or a new residence without the requisite intention is not sufficient for the acquisition of a new domicile and in either case would suffice for the retention of the existing domicile.

You are not an Australian citizen therefore you do not have an Australian domicile.

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 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. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.

Taxation Ruling IT 2650 sets out several factors to be considered in determining whether a person has established a permanent place of abode outside of Australia.

The weight of each factor will vary on a case by case basis and no single factor will be decisive. The factors to be considered are:

· the intended and actual length of stay in the overseas country - the longer the stay, the more permanent in nature, the more likely that a permanent place of adobe has been established. Generally, a period of two years or more is regarded as a substantial period of time for the purpose of taxpayer's stay; this however is not itself conclusive

· whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time. This factor requires an intention to stay in a specific country overseas and not simply the intention to remain out of Australia

· whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia

· whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence

· the duration and continuity of the taxpayer's presence in the overseas country, and

· the durability of association that the person has with a particular place in Australia, i.e. maintaining Australian bank accounts, family ties and so on.

Applying your circumstances to each of the factors:

You went to country A to care for your dying relative and to support your family. It was always your intention to stay in country A while your family needed your support and to care for your relative until they passed away.

You stayed with your relative whilst you were in country A and paid board but did not establish a home in country A. You maintained your residence and a rental property in Australia over the time you were in country A. Although you have close family ties in country A you have closer economic ties with Australia where you maintain a residence and a rental property and have established your life.

Therefore, the Commissioner is not satisfied that you have established a permanent place of abode outside of Australia.

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 were not in Australia for 183 days in any income year.

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 or the Commonwealth Superannuation Scheme, or that person is the spouse or child under 16 of such a person.

It is not necessary to consider this test as you are a resident under the 'domicile test'.

Your residency status

You have maintained your Australian residency status for taxation purposes. Although you did not reside in Australia during this period of time it was always your intention to be in country A for a short period of time to support your family through your relative's terminal illness. Accordingly, the Commissioner is not satisfied that you established a permanent place of above outside of Australia during the period you were living in country A.

You are an Australian resident for taxation purposes for the period.

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