Edited version of private ruling

Authorisation Number: 1011851006495

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Ruling

Subject: Residency

Question and answer:

Are you an Australian resident for income tax purposes for the 2011-12 income tax year?

No.

This ruling applies for the following period:

1 July 2011 to 30 June 2012.

The scheme commenced on:

1 July 2011.

Relevant facts:

You were born overseas, are a citizen of the country you were born in, and are over the age of 16.

You are also an Australian citizen and you have an Australian passport allowing you to enter and leave Australia without a visa.

You are a resident of the country you were born in for taxation purposes.

Your immediate family resides in Australia.

You have remained living in the country you were born in where you reside in the family home.

You intend to remain living in the country you were born in for at least a couple of years, after which you may or may not move to Australia.

In the country you reside in:

· you have strong family, social and professional ties, and

· significant assets, including real estate.

You will not be in Australia for a total of 183 days or more during the 2011-12 income tax year.

Your employment is based in the country you live in.

You travel to Australia through your employment and for holidays.

You are often able to visit with or stay with your family when you are in Australia. Otherwise, you stay in accommodation provided by your employer.

Your assets in Australia are significant and include real estate.

You have a permanent place to live in Australia.

In Australia, outside of your family you have no social, professional or sporting ties.

You are not, and you do not have a spouse who is, either:

· a member of the public sector superannuation scheme (PSS) established under the Superannuation Act 1990, or

· an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) established under the Superannuation Act 1976.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Residency for taxation purposes - general

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 subsection 6(1) 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 and permanent place of abode test,

· the 183 day test, and

· the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered.

If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.

The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

Taxation Ruling IT 2650 Income Tax: residency - permanent place of abode outside Australia specifies that a person's place of abode is where they live.

In your case, although your immediate family resides in Australia and you travel to Australia to visit them, you have remained living in the family home in another country and intend to remain there for at least the next couple of years. We consider your home in the other country to be where you are residing according to the ordinary meaning of the word 'reside'.

Furthermore, Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia specifies that while the length of time an individual is in Australia is relevant, it is not necessarily decisive in determining whether an individual is residing in Australia. Instead, Taxation Ruling TR 98/17 notes it is the behaviour of the individual while in Australia, rather than the length of time spent in Australia, that has more relevance in determining if there is any degree of continuity, routine or habit in their behaviour that is consistent with the individual residing here.

In assessing an individual's behaviour while in Australia, the Commissioner considers a number of factors, including:

Intention or purpose of presence, employment and family ties - In relation to these issues, TR 98/17 notes that:

Staying in Australia for short periods of time for work purposes is normally insufficient to establish that an individual is a resident, particularly if it can be said the individual's ordinary residence is outside of Australia.

An individual in Australia on holidays would not be considered to be residing here.

The presence of an individual's family in Australia does not always result in a decision that the individual is residing here.

In your case, you are employed in another country but you travel to Australia because of your employment. You also holiday in Australia. The fact that you visit with and stay with your family when you come to Australia is not sufficient on its own to suggest you are residing in Australia according to the ordinary meaning of the word.

We consider this to be particularly so in your case because, although your immediate family lives in Australia and you travel to Australia to visit them, you have remained living in the family home in another country. Furthermore, you intend to remain living in the other country for at least the next four years, and may or may not migrate to Australia after that.

Maintenance and location of assets - TR 98/17 notes that having assets in Australia adds weight to concluding an individual's behaviour is consistent with residing here.

You own property in Australia and operate a bank account in Australia. It can therefore be said that your assets in Australia are significant. Whilst it could be argued that your ownership of and interest in these assets indicates an intention to reside in Australia, your assets in the other country are also significant. Considering this, and your stated intention to reside in the other country for at least another couple of years, we do not consider your Australia assets add any significant weight at this time to any conclusion that your behaviour is consistent with residing in Australia.

Social and living arrangements - TR 98/17 notes that social and living arrangements are the way an individual interacts with their surroundings and specifies that joining sporting or community organisations, or committing to a residential lease are examples of social and living arrangements that may indicate an individual is residing here.

Your immediate family is in Australia living in a home that provides you with a permanent place to live when you visit Australia and are able to stay with your family. However, you also continue to reside in the family home in the other country and you have maintained family, social and professional ties in that country. In contrast, you are not a member of any social club, church group, professional or sporting organisation in Australia. Accordingly, and notwithstanding the presence of your family here and the fact that you have a permanent place to live available to you when you come here, we do not consider your social and living arrangements are sufficient to suggest your behaviour is consistent with residing in Australia.

In view of the above, we consider your home in the other country is where you are residing according to the ordinary meaning of the word 'reside'. Accordingly, you will not be a resident of Australia for taxation purposes under the resides test during the 2011-12 income tax year.

The domicile and permanent place of abode test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia.

A person's domicile is generally their country of birth. This is known as a person's domicile of origin. A person's domicile of origin will not usually change but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to acquire a domicile by choice outside of their domicile of origin, a person must have and be able to prove an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person becomes a citizen of a country outside of their domicile of origin.

Taxation Ruling IT 2650 specifies that a person with an Australian domicile who is living outside Australia will retain their Australian domicile if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency' - at the end of a specific period of time for example.

Although your domicile of origin is in the other country, you obtained an Australian domicile by choice when you became an Australian citizen. However, we do not consider that you have retained your Australian domicile because you cannot say with certainty that you will migrate to Australia. Rather, you can only say with certainty that you will remain living in the other country for at least the next four years.

Considering this, we consider your domicile has reverted to your domicile of origin.

As a result, it is not necessary to consider where your permanent place of abode is under this test and you will not be a resident of Australia for taxation purposes under this test in the 2011-12 income tax year.

The 183-day test

Where a person is present in Australia for 183 days during an income year, the person will be a resident of Australia for taxation purposes 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.

You will not be a resident of Australia for taxation purposes under this test in the 2011-12 income tax year because you will not be in Australia for more than 183 days during the 2011-12 income tax year.

The superannuation test

Under this test, an individual will be considered a resident of Australia for taxation purposes if:

· they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990,

· they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976, or

· they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

In your case, you are over the age of 16, and you are not a member of the PSS or an eligible employee for the purposes of the CSS.

You do not have a spouse who is a member of the PSS or an eligible employee for the purposes of the CSS.

Accordingly, you are not a resident of Australia for taxation purposes under this test.

Conclusion - your residency status

Based on the facts in this ruling, you will not be a resident of Australia in the 2011-12 income tax year.

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