Edited version of private ruling

Authorisation Number: 1011592474619

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Ruling

Subject: Residency

1. Were you a resident of Australia for taxation purposes in the 2009-10 income year?

Yes.

2. Were you a resident of Australia for taxation purposes in the 2008-09 income Year?

Yes.

3. Were you a resident of Australia for taxation purposes in the 2007-08 income year?

Yes.

4. Were you a resident of Australia for taxation purposes in the 2006-07 income year?

Decline to rule

5. Were you a resident of Australia for taxation purposes in the 2005-06 income year?

Decline to rule

6. Were you a resident of Australia for taxation purposes in the 2004-05 income year?

Decline to rule

7. Were you a resident of Australia for taxation purposes in the 2003-04 income year?

Decline to rule

8. Were you a resident of Australia for taxation purposes in the 2002-03 income year?

Decline to rule

9. Were you a resident of Australia for taxation purposes in the 2001-02 income year?

Decline to rule

10. Were you a resident of Australia for taxation purposes in the 2000-01 income year?

Decline to rule

This ruling applies for the following period

Year ended 30 June 2010

Year ended 30 June 2009

Year ended 30 June 2008

The scheme commenced on

1 July 2000

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 were born in country A and immigrated to Australia.

You have been naturalised and you remain a citizen of Australia.

You resided in Australia until your departure in 2000.

Your partner was born in Australia and also remains a citizen of Australia. Your partner accompanied you overseas.

You departed Australia in order to undertake overseas employment.

You were initially employed for a minimum term of three years with an extension for a further two years. Thereafter, you undertook employment in country B for three years and county C for two years.

On departing Australia, it was your intention to reside overseas indefinitely, returning from time to time for holidays in the short periods between contracts.

You expect that you will only make a permanent return to Australia upon retirement.

At the time of your departure you rented out your home under a long term lease agreement. Your furniture and other belongings were placed into storage, your clothing and personal affects were moved overseas. This residence was disposed of and an investment property acquired.

Arrangements were made with your banking institutions to facilitate transfers to newly established overseas bank accounts.

Australian mail was redirected to your overseas postal boxes.

You purchased vehicles in country C and D. Such transport was not required whilst residing in B.

You have lived and worked overseas for almost ten years.

You anticipate either extending your current contract in country C or relocating elsewhere overseas dependent upon the upcoming employment opportunities.

In the short period between the upcoming contracts you also intend to visit your family overseas.

You and your partner's children are all independent adults living throughout Australia with their own families.

Any return trips to Australia since you first left were for the purpose of visiting your family.

You returned to Australia between contracts.

During these holidays you and your partner stayed in hotels or short term rental accommodation.

During your most recent trip to Australia you and your partner stayed at your Australian investment property to oversee repairs and renovations on the property and prepare it for continuance under long term lease.

Your partner spent longer in Australia than expected due to delays in the renovation process. They will be returning to your residence overseas as soon as possible.

When you were in Australia while renovations were being carried out you did not maintain a lease on an overseas property.

You made one other 'non-holiday' return trip to Australia where spent several weeks in Australia on sick leave.

You were contracted in country C. This was from mid 2009 to early 2010. This same contract was subsequently extended until mid 2010.

You have never been a Commonwealth employee.

Your partner worked for the Commonwealth Government until a specified date and is a contributing member of a super fund that is not PSS or the CSS.

You have been in Australia since mid 2010 and have not provided a departure date.

From early 2001 until late 2008 you have leased properties.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 6(1).

Income Tax Assessment Act 1997 section 6-5.

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 resides test

· The domicile test

· The 183 day test

· 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.

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'.

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.

In your case, you have been overseas for the period of mid 2007 to the end of 2008 and from mid 2009 to mid 2010.

For the period end of 2008 to mid 2009 you are considered to be residing in Australia according to ordinary concepts as you were in Australia to oversee renovations and did not maintain a lease on an overseas property.

During the periods of mid 2007 to late 2008 and mid 2009 and mid 2010 you did not reside in Australia.

The domicile test

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.

IT 2650 states that a work visa would not be sufficient evidence to prove an intention to acquire a new domicile of choice, even if it was for a substantial period of time such as two years. Obtaining a migration visa, on the other hand, would constitute sufficient proof of such an intention.

You have stated an intention to reside overseas indefinitely. However, the concept of domicile relates to a country, therefore, it is not possible to have a domicile of overseas.

You moved countries to obtain employment contracts and lived in leased properties.

You also returned to Australia when you were between contracts, staying until you negotiated a new contract.

You are considered to have maintained your 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 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 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 abode has been established. Generally, a period of two years or more is regarded as a substantial period of time for the purpose of taxpayers 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, that is, maintaining Australian bank accounts, family ties and so on.

Applying your circumstances to each of the relevant factors:

It is your intention to stay out of Australia indefinitely. Although you spent a greater percentage of time overseas this was broken by a period of time returned to Australia for house renovations and between contracts.

It was your intention to move countries as and when required to wherever you were able to secure an employment contract.

During the period in question you lived in rental accommodation. You have not sought to purchase or secure long term accommodation as you are required to move to secure employment.

You own a residential rental property in Australia.

You have moved from country to country with your employment contracts and have not established a home in any country.

From mid 2007 - mid 2010 there is no evidence that you made your home indefinitely in another country.

Although you have stated that you left Australia to work overseas for an indefinite period, you have not severed all connections with Australia as you still have a rental property here and significant family which you regularly visit between contracts.

Therefore, you have failed to establish a permanent abode outside of Australia.

3. 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.

In the following income years:

During the 2008-09 financial year you were present in Australia for less than 183 days.

During the 2009-10 financial year you were present in Australia for less than 183 days.

You did not exceed the 183 day period. You are not a resident under this test.

4. 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 have never been a Commonwealth employee. As you and your partner do not contribute to the PSS or the CSS you are not considered to be a resident of Australia.

Your residency status

You are a resident of Australia under the domicile test.

You are therefore a resident of Australia for taxation purposes and required to declare your income from both inside and outside of Australia in your tax returns.

Decline to rule

If the Commissioner considers that making the ruling would prejudice or unduly restrict the administration of a taxation law, the Commissioner may decline to make a private ruling (paragraph 359-35(2)(a)of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953)). One reason for declining to rule would be where the issue of a ruling would not have any practical consequences for the taxpayer.

For example an individual salary and wage earner requests a private ruling on their liabilities-obligations for the 1999-2000 tax year on 10 January 2006. Their liabilities-obligations for that tax year will not be affected by the outcome of the ruling because the opportunity for them to act on the advice has passed that is the amendment period (two or four years depending on taxpayer's status) has passed.

As the two year amendment period for the 2000-01, 2001-02, 2002-03, 2003-04 2004-05, 2005-06 and 2006-07 income years has expired any finding by the Commissioner will not have any practical consequences for you.

Therefore, we are declining to rule for the 2000-2001 through to the 2006-2007 financial years.

A decision to decline to rule by the Commissioner is not reviewable under the tax law. However, it may be reviewable under the Administrative Decisions (Judicial Review) Act 1977.

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