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Edited version of private ruling

Authorisation Number: 1011615408042

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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 2010.

Year ending 30 June 2011.

The scheme commenced on:

1 July 2009.

Relevant facts and circumstances

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

Some time in the 2009-10 income year, you moved to Country A with your spouse and children.

You state that the reason for your move was to accept a permanent job overseas.

To begin with, your salary was negotiated for a specific period. It was to be re-negotiated at the end of this specific period. Hence, the job was not going to cease at the expiry of this specific period - it was to be on a permanent basis, for an indefinite period of time.

You anticipated staying in Country A for a minimum of three years when departing Australia. You also stated that you would consider extending your stay at the expiry of the specifically mentioned period - depending on the remuneration package re-negotiations.

In Country A, you have been renting an apartment for a specific period. Your children also go to school in Country A, and your family's personal assets went to Country A as well.

Your residence in Australia has been retained, however, its currently being rented unfurnished and you have just renewed the tenancy agreement with the tenant until some time mid 2011.

Since moving to Country A you have only been back to Australia for work trips and a holiday.

You notified the electoral office and also your bank about leaving Australia. Hence, the bank has commenced withholding non-resident withholding tax on interest derived.

You have recently been offered a job back in Australia. If you accept this, it would result in you returning to reside in Australia within a specific period instead of the anticipated minimum of three year stay when you initially departed. You would return some time in the 2010-11 income year.

You are not a member of any sporting or social clubs in Australia.

In Country A, you are a member of a particular organisation. Your child is also a member of a particular sporting organisation.

You and your spouse, are not, or were not Commonwealth Government of Australia Employees.

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 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'.

Since some time in the 2009-10 income year, you've been residing in an apartment in Country A. You've also been working there in a permanent role, and you've stated an initial intention to stay there 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.

However, 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 is in Country A.

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 2009-10 income year, until you return some time in the 2010-11 income year.

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