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Edited version of your private ruling

Authorisation Number: 1012127998903

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Subject: Residency

Question

Are you an Australian resident for taxation purposes?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 2012

Year ending 30 June 2013

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are a citizen of Australia.

Australia is your country of origin.

You departed Australia in 2005.

You have always paid tax in Country X.

You have a visa based on employment in Country X.

Your purpose of visit to Country X is employment and life experience.

You do not have any fixed plans to return to Australia, however, you are hoping to return to Australia within the next year or so.

You have come back to Australia for the following periods since first leaving Australia. Since you left you have not been in Australia for more than 183 days in any income year.

You have a permanent place to live in Country X.

You have always lived in rented accommodation in Country X. You were living with your partner but you separated from your partner last year and you now live in shared accommodation with flatmates.

You have a day to day bank account in Country X.

You were living in rental accommodation prior to leaving Australia.

You stay at your mother's house when you come to Australia.

You have a day to day bank account and an on-line bank account in Australia.

You have an ongoing employment contact overseas with no fixed end date.

You do not have dependants and your family did not accompany you overseas.

You had a partner in Country X but you are no longer together.

You have the following social and sporting connections with Australia. You grew up in Australia and all your family and many of your friends are in Australia. You read the Australian papers daily on line. You are a supporter of Football club A.

You have the following social and sporting connections with Country X. You have friends in Country X. You play football.

You are a member of Superannuation Company A.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 6-5(3)

Income Tax Assessment Act 1997 subsection 6-10(5)

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

Residency

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:

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. 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'.

You are currently residing in Country X as evidence by:

Therefore, you are not 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 to 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,

Based on these facts, the Commissioner is satisfied that you have established a permanent place of abode outside of Australia.

The 183-day test

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

The superannuation test

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

You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

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, you are not an Australian resident from the date of your departure from Australia under subsection 995-1(1) of the ITAA 1997.

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