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Edited version of private ruling

Authorisation Number: 1011584864581

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Ruling

Subject: Residency - Foreign Resident

Are you an Australian resident for income tax purposes?

No.

This ruling applies for the following period/s:

Year ended 30 June 2011.

Year ended 30 June 2012.

Year ended 30 June 2013.

Year ended 30 June 2014.

The scheme commenced on:

1 July 2010.

Relevant facts and circumstances

You are a resident of Country A under Country A income tax legislation.

You are an employee of Company A (a Country A resident company that has all voting rights held by the family trusts of you and your spouse).

You are also the director of various Country A resident companies and Company B, an Australian company.

You and your spouse's family trust are the ultimate shareholders of Company B.

Your spouse is currently a temporary resident of Australia for income tax purposes.

Your spouse is currently residing in Australia with their dependant children who are attending a school in Australia.

You have a permanent home available in Country A (owned by a Country A trust of which you are a beneficiary) where you permanently reside.

You are a beneficiary of various Country A trusts that hold controlling interests in various Country A tax resident companies. Those Country A trusts hold substantial assets. You are not a trustee of any of the trusts.

Your financial and economic ties are in Country A.

You are likely to spend a certain amount of time in Australia visiting your spouse and children. It will not be in excess of 183 days in a 12 month period. However, there is potentially significant renovation work to be required in respect of a property acquired in Australia by Company B. You may then exceed 183 days for a limited period of time spent on this renovation.

It is not contemplated that you will receive any dividends from any of the companies under your control.

You receive no trust distributions.

You and your spouse are able to fund your lifestyle over and above your salaries from capital funds sourced from Country A.

You and your spouse have no intentions of becoming Australian citizens.

Relevant legislative provisions

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

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

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 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

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'.

Taxation Ruling TR 98/17 considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

In your case, you generally only come to Australia for a certain period of time within a 12 month period to visit your family. Whilst you are in Australia, you reside temporarily in the accommodation your spouse is leasing. Therefore, it is considered that you are not an Australian resident for taxation purposes under the resides test as your behaviour in Australia does not reflect a degree of continuity, routine or habit that is consistent with residing here.

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.

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 are a citizen of Country A. Although you maintain an association with Australia through your periodic visits to your family, your association with Country A is more significant as you have a permanent place to live in Country A and you also have economic and financial ties there.

Based on these facts, you are considered to have established a permanent place of abode outside of Australia. Therefore, you are not considered to be a resident of Australia for income tax purposes under the domicile test.

The 183-day test

Under the 183-day test, a person will be considered an Australian resident if they are present in Australia for 183 days during the year of income unless the Commissioner is satisfied that the persons usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

This test does not apply to you as it is considered that your permanent place of abode is outside Australia.

The superannuation test

Under the superannuation test, a person will be considered an Australian 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 and your spouse are not members of the PSS or the CSS. Therefore, you will not be treated as a resident under this test.

Your residency status

As you are not deemed to be a resident of Australia under any test of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be a resident of Australia for income tax purposes.

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