| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011799581000
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Residency
Question:
Will you be an Australian resident for income tax purposes?
Answer: No.
This ruling applies for the following periods:
Year ended 30 June 2009.
Year ended 30 June 2010.
Year ending 30 June 2011.
The scheme commenced on:
1 July 2008.
Relevant facts
You are an Australian citizen and your country of origin is also Australia.
You officially departed Australia some time in the 2007-08 income year.
You have a specific visa for Country A which is valid for 3 years with an option to extend. This currently expires some time in the 2013-14 income year and has already been extended on your initial entry.
You moved to Country A for a long term contract.
You have created and own Company A in Country A.
You've been based in Country A since some time in the 2008-09 income year. You will be residing in Country A for another one to two years.
You plan to return to Australia around 2012 to 2013.
You have only returned to Australia for short periods to see family and business reasons. You expect that this will continue over the coming years.
You have signed a residential lease for one year in Country A with an option to extend. This is after a two year lease had expired.
The assets you hold in Country A are a specific share in Company A. You also own a personal Country A bank account.
Before departing for Country A, you rented a house in Australia. You do not own any other properties.
In Australia, you have these assets:
· A car which is parked at a friend's house. You retained this vehicle because you found it more economical than hiring a car.
· Three personal bank accounts which receive money from time to time for your salary from a Country A bank account.
· A couple of superannuation funds.
· 100% ownership of Company A in Australia.
· Some share investments.
In Country A, you have held an employment contract for the past three years. This was extended to some time in the 2011-12 income year and is likely to be extended further finishing in 2013. You are the local director of Company A in Country A.
Your spouse relocated to Country A some time late in the 2008-09 income year.
In Country A, you have a membership with a particular group, as well as a gym membership.
Neither you or your spouse, are or have been Commonwealth Government of Australia employees.
Relevant legislative provisions
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 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 a resident of Australia for tax purposes if they satisfy 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'.
As you've been residing in Country A, you will not be 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 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 will be away from Country A for a few trips that are business related or holidays. Therefore, you would be considered to have maintained your Australian domicile.
In addition, although you've been visiting Australia for short holiday periods and business trips a few times a year, your associations with Country A will be considered to be more significant as:
· you will be residing in Country A for another one to two years, and, you have been residing there since some time in the 2008-09 income year.
· you have signed a residential lease for one year in Country A with an option to extend. This is after a two year lease had expired.
· you have held an employment contract for the past three years. This was extended to some time in the 2011-12 income year and is likely to be extended further finishing in 2013.
· your spouse relocated to Country A some time in the 2008-09 income year and has been residing with you since.
· you have a membership with a particular group, and a gym membership.
Based on these facts, it is considered that you have established a permanent place of abode outside Australia in Country A. Therefore, you will not be considered to be an Australian resident for income tax purposes under the domicile test.
Your residency status
As you are not deemed to be an Australian resident under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936 there is no need to examine the remaining tests. Therefore, you are not considered to be an Australian resident for income tax purposes.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
