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Edited version of your private ruling

Authorisation Number: 1012080709913

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Ruling

Subject: Residency status

Questions and answers:

Not applicable.

This ruling applies for the following period

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

20 October 2010

Relevant facts

You were born in Australia and are an Australian citizen.

You are single with no dependents.

You are employed by an international company in Australia.

You departed Australia to take up an employment contract with your current employer in country X.

The employment contract that you have with your employer in country X does not have an expiry date, however the completion of your overseas employment contract is dictated by the expiry date of your visa.

You entered country X on a working visa which expires after an extended period.

The nature of the visa is that you are required to work for your employer and must return prior to the expiry of the visa.

When you arrived in country X you rented an apartment for a short period, while you were waiting for country X specific identification number.

Once you received a country X identification number, your employer provided hotel accommodation adjacent to your place of employment.

After a short period you found more permanent accommodation when you rented another apartment which has remained you current address.

As a condition of your employment contract, you are required travel between offices in country X as well as outside of country X. You spent a number of days away from your usual country X residence for both work and personal reasons.

Your country X employer has provided you with an allocated a work station and computer etc, however when you are required to travel the workstation is made available to others.

The assets that you hold in Australia are;

When you moved to country X you disposed of you motor vehicle.

Your assets that you hold overseas consist of a bank account.

Your wages from your country X contract are paid into your over seas bank account.

You are paying income tax on your salary in country X.

You have returned to Australia on one occasion for a short period for family reasons.

You have maintained your Australian sporting and social ties and various memberships that include hold.

You have not established any substantial sporting or social ties in country X to be temporary in nature.

The only social ties are friendships that you have formed in country X are with work your colleagues.

You have never been a Commonwealth Government of Australia employee.

You expect that your pattern of travel will remain relatively consistent up until your visa expires.

You intend to return to Australia once your visa expires.

Relevant legislative provisions

Income Tax Assessment Act 1997, Subsection 995-1(1).

Income Tax Assessment Act 1936, Subsection 6(1).

Reasons for decision

An Australian resident for tax purposes is defined in subsection 995-1(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 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 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'.

TAXATION RULING IT 2650: RESIDENCY - PERMANENT PLACE OF ABODE OUTSIDE AUSTRALIA, provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay.

The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states:

In your case, you left Australia to live and work in country X for a period of 3 years. As you living overseas and are engaged in working overseas for a long period, you are not considered to have been residing in Australia. Accordingly, you are not residing in Australia and so are not a resident for taxation purposes under the 'resides 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 of Australia.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.  From the information that you have provided, you have not demonstrated an intention to become a citizen of the country X and are still a citizen of Australia, therefore it is considered your domicile is unchanged.

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

Paragraphs 16 and 17 of IT 2650 state;

Paragraph 28 of IT 2650 states;

Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include:

In your case you:

In considering the above, the fact that you have established a home (long term leased accommodation) in country X indicates that your place of abode in country X is permanent, this view is consistent with the view expressed in paragraph 28 of IT 2650. This is despite of your intension to return to Australia at the end of your employment contract. In paragraph 17 of IT 2650, it was considered that if a stay of 10 years could not sensibly be regarded as "temporary", neither should a stay of 3 years be so regarded. Therefore, consistent with the views expressed in paragraph 17 of IT 2650, the time that you will spend in country X is not considered to be temporary. Although you are often required to travel to other destinations as a consequence of your employment and for personal reasons, you always return to a fixed location. On the balance and based on the above, the Commissioner is satisfied that you have a permanent place of abode outside of Australia, therefore you are not a resident for taxation purposes under the 'domicile test'.

The 183-day test

Where a person is present in Australia for more than183 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.

You were not in Australia for a period greater than 183 days during the 2010-11 financial year and this pattern is expected to continue for the future years included in this ruling, therefore you are not considered to be a resident of Australia for income tax purposes under this test.

Accordingly, you are not a resident of Australia for income tax purposes under 'the 183-day test'.

The Superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.  Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

As you are over the age of 16 years and have not, or have you ever been a member of a CSS or PSS you are not a resident of Australia under this test.

Accordingly, you are not a resident of Australia under 'The Superannuation Test'.

Your residency status

As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not an Australian resident for income tax purposes.


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