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Edited version of private ruling
Authorisation Number: 1011745791916
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Ruling
Subject: Residency
Question
Are you an Australian resident for income tax purposes?
Answer
Yes
This ruling applies for the following period
Year ending 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commenced on
1 July 2010
Relevant facts and circumstances
You are an international airline pilot.
You entered into a one year contract with Country X airlines, and then a three year contract.
You are based in Country X
You have a residency permit for Country X.
You live in a hotel in Country X.
You work on a cycle of a number of weeks on and some weeks off.
Your employer provides you with a return ticket for the each two week period off.
Your spouse and children live in the family home in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1936 subsection 6(1)
Reasons for 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 an Australian resident 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 an Australian resident for income 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 dictionary meaning, 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.
As you are residing in Country X, you are not considered to be residing in Australia under this test.
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 Australia.
In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country, for example, through having obtained a migration visa. A working visa, even for a substantial period of time such as two years, would not be sufficient evidence of an intention to acquire a new domicile of choice.
Taxation Ruling IT 2650 states that 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.
The leading case on whether a permanent place of abode is outside Australia is FC of T v Applegate (79 CTC 4307; (1979)). The Federal Court said that in the context of the definition of resident for taxation purposes, for a place of abode to be permanent it does not have to be everlasting or forever.
The following factors, listed at paragraph 23 of IT 2650, have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and regarding a taxpayer's permanent place of abode. They include:
(a) the intended and actual length of the taxpayer's stay in the overseas country;
(b) whether the taxpayer intended to stay in the overseas country only temporarily then move on to another country or return to Australia at some definite point of time;
(c) 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;
(d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;
(e) the duration and continuity of the taxpayers presence in the overseas country; and
(f) the durability of association that the taxpayer has with a particular place in Australia for example, maintaining bank accounts, informing government departments such as Centrelink that he or she is leaving Australia permanently and that any benefits such as family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.
IT 2650 states that the weight to be given to each factor will vary with the individual circumstances of each particular case, and no single factor will be decisive.
In your case, although you are based in Country X, your associations with Australia are considered more significant for the following reasons:
You maintain a family home in Australia
Your spouse and children reside in the family home in Australia
You reside in a hotel in Country X
You return to Australia for approximately 3 months per year to visit your spouse and children
Based on these facts, it is considered that you have maintained your Australian domicile and have not established a permanent place of abode outside Australia. Therefore, you are considered an Australian resident for taxation purposes under the domicile test.
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