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Edited version of private ruling

Authorisation Number: 1011715098959

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Ruling

Subject: Residency - working overseas

Question

Are you a resident of Australia for income tax purposes whilst working overseas?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2008.

The scheme commences on:

1 July 2007.

Relevant facts

You are a citizen of Australia.

You and your spouse departed Australia in July 2007 on a tourist visa.

The purpose of your trip was to visit family and to explore employment opportunities in Country A.

You had no intention of permanently living in Country A or returning to Australia at a definite point in time.

You had a permanent place to live in Country A.

Your overseas assets consist of a house in Country A which has been rented out.

You had casual employment in Country A.

You had no social and sporting connections with Country A.

Upon your return to Australia, you stay with your parents.

Your assets in Australia consist of an investment.

You had no social or sporting connections with Australia.

You and your spouse are not Commonwealth Government of Australia Employees and have not held a position with the Commonwealth Government of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1.

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

An Australian resident is defined in subsection 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in paragraph 6(1)(a) 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 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 if they meet the conditions of one of the other three tests.

1. 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; have 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 will not be dwelling permanently or have a settled place of abode in Australia during the period you are in Country A. Therefore, under the resides test, you will not be considered as residing in Australia during the period that you are overseas.

2. The domicile test

Generally, 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.

Domicile

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, you have advised that you had no intention of permanently living in Country A or returning to Australia at a definite point in time. Since there is no evidence of any intention on your part to make your home indefinitely outside Australia, you are considered to have maintained your Australian domicile.

Although your spouse accompanied you to Country A, whilst overseas, you continue to maintain an association with Australia through your family and investment. Based on these facts presented above, it is considered that you have not established a permanent place of abode outside Australia and are therefore considered to be a resident of Australia for tax purposes under the domicile test.

3. The 183-day test

Where 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.

This test does not apply to you as you will not be present in Australia for 183 days during the income year.

4. The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person.

In your case, 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

You will be deemed to be an Australian resident for income tax purposes under the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the year ended 30 June 2008 from the date of your departure from Australia.

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