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Edited version of private ruling

Authorisation Number: 1011606819186

Ruling

Subject: Residency - Foreign Resident

Question:

Were you an Australian resident for income tax purposes from some time in the 2007-08 income year to the end of the 2009-10 income year?

Answer: No.

This ruling applies for the following period/s:

Year ended 30 June 2008.

Year ended 30 June 2009.

Year ended 30 June 2010.

The scheme commenced on:

1 July 2007.

Relevant facts and circumstances

You are an Australian citizen and your country of origin is Australia.

You departed Australia some time in the 2007-08 income year, signing a specific contract to work overseas as a representative of an Australian company in Country A.

You intended to stay overseas and work for longer than two years when you initially left. Your role involves living overseas on an extended basis.

Your employment contract is reviewed on a yearly basis with the next review period some time in the 2011-12 income year.

Your specific position doesn't appear to be completed anytime in the near future. Should the position be terminated there, you have no immediate intention of returning to Australia.

Your spouse who is from Country A, is pregnant with your first expected child due some time in the 2010-11 income year. Therefore, you state that you would consider further employment in Country A or in another specific overseas region should your current position be terminated.

The only assets you own in Australia include some shares in an Australian non-listed private company, superannuation and cash held in a savings account. You don't own any other property in Australia, nor do you have any leases on any homes.

You and your spouse are currently co-signees on a lease for an apartment in Country A.

Your parents and siblings remain in Australia.

For a few weeks in two specific months in each year, you visit Australia. When you visit, you typically reside in a hotel or your parent's home.

You do not have any formal connections to any sporting bodies or clubs in Australia.

Your social activities in Country A revolve around spending time with your spouse, catching up with friends, watching specific sports, eating out and going to the cinema.

You are liable to income tax in Country A on the income you derive from working in Country A.

You or your spouse are not, or have never been Commonwealth Government of Australia employees.

Relevant legislative provisions

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

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 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 meet 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'.

In your case, you were residing in Country A as evidence by renting an apartment with your spouse and working there since some time in the 2007-08 income year. You also stated an intention to reside overseas indefinitely.

Therefore, you were 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.

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.

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.

In your case,

Therefore, you are not considered to have maintained your Australian domicile.

Based on these facts, the Commissioner is satisfied that you have established a permanent place of abode in Country A.

The 183-day test

This test does not apply to you as it has been identified that your permanent place of abode was overseas.

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 will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

Your residency status

As you are not considered to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) from the date of your departure from Australia some time in the 2007-08 income year.

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