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Ruling

Subject: Residence

Questions and answers:

Are you a resident of Australia for tax purposes?

No

This ruling applies for the following period:

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 Australian citizen.

You were born in Australia.

You left Australia x May 20xx.

Your stay in the overseas country is covered by a working visa. You are in the process of applying for a permanent residence.

The purpose of your travel is to work as a religious practitioner.

You intentions to stay in the overseas country are to fulfil your mission there. You will go where your church sees important for you to go.

You have no plans to return to Australia unless your ministry work directs you back to Australia.

You have notified Centrelink that you will be living away from Australia for an indefinite period.

You have returned to Australia for a two week period in 2010.

You have a permanent place to live in the overseas country.

Your assets in the overseas country include bank accounts.

Your assets in Australia include bank accounts and shares.

You sold your home in Australia when you were informed of your transfer to the overseas country.

You pay income tax in the overseas country on your stipend.

Your spouse and dependents have accompanied you. Your spouse and dependents are foreign citizens.

You have social connections in Australia with your family and members of your former parish.

You have social connection with your new parishioners in the overseas country. You are also involved in a family member's youth league participation.

Neither you or your spouse have ever been in the employ of the Commonwealth of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia.  However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. 

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: 

o the resides test,

o the domicile test,

o the 183 day test, and

o 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 meet 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. 3^rd 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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

· whether the person is physically present in that country at some time during the year of income

· the history of the person's residence and movements

· if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits

· if the person is outside the country for part of the relevant income year, the purpose of the absences

· the family and business ties which the person has with the particular country, and

· whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.

You have been absent from Australia, only returning for two weeks since departing in 20xx.

You were granted working visa for xyz. You are in the process of applying for permanent residence

The purpose of your absence from Australia was in fulfilment of your vocational placement. You are gainfully employed as a ministered and are provided a dwelling for your family.

Your spouse and dependents have accompanied you. Your spouse and dependents are foreign citizens.

You have sold your home in Australia.

On the weigh of your circumstances, you are not a resident of Australia under the resides test.

The domicile test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases.

Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law.

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 their home indefinitely in that country, for example, through having obtained a migration visa.

You are in the process of applying for permanent residence in the overseas location, at this point is has not been established. Your domicile is Australia because you are an Australian citizen who has not legally established a different domicile.

Permanent place of abode

It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.

The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that "a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression."

A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller.

Paragraph 23 of IT 2650 sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode:

· the intended and actual length of the taxpayer's stay in the overseas country;

· whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

· 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;

· whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

· the duration and continuity of the taxpayer's presence in the overseas country; and

· the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

In relation to the weight to be given to each of the above factors, paragraph 24 of IT 2650 states:

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… however… greater weight should be given to factors (c), (e) and (f) than to the remaining factors, though these are still, of course, relevant.

Where a taxpayer leaves Australia for an unspecified or a substantial period and establishes a home in another country, that home will represent a permanent place of abode of the taxpayer outside Australia subject to their intention and actual absence.

You stated intention upon departing Australia on x May 20xx was to depart with no intention to return.

You intended to remain in the overseas location in order to fulfil your vocational mission.

You sold your property in Australia.

You have not resettled in Australia since departing.

On the weight of your circumstances, your permanent place of abode is outside Australia. Therefore, for this test you are not a resident of Australia.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent of abode is outside of Australia and they have no intention of taking up residence here.

As you were not present in Australia for more than 183 days in any of the income years, you are not a resident under this test.

The superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds:

· established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or

· established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or

· the spouse or child under 16 of a person covered by either of the above funds.

You and your spouse have never been a Commonwealth government employee and therefore you are not able to contribute to the abovementioned superannuation schemes. Therefore, you are not a resident under this test.

Your residency status

As you do not meet any of the above tests, you are not a resident of Australia for tax purposes.

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