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Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

You were born in country Y and became an Australian citizen a number of years ago.

You left Australia a number of years ago to take up employment in country Y.

You state you have decided to live permanently in country Y and was awarded permanent residency.

You are currently residing with your spouse, and working in country Z in a permanent position and have a resident visa. Your current plan is to work in country Z until you retire and then retire to country Y.

You maintain two bank accounts in country Z.

You have a rental property in Australia.

You do not plan to return to Australia other than to attend to your rental property and visit relatives.

You maintain a permanent place of abode in country Z and in country Y which you rent.

You have no social or sporting connections with Australia.

You have an Australian Superannuation Fund.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Subsection 995-1(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 first two tests are examined in detail in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia.

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'.

As you are maintaining a permanent place of abode in country Z where you reside with your spouse and are working full time in country Z and intend to retire to country Y, you are not considered to be residing in Australia. You are not a resident under this 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.

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.

In your case, you are an Australian citizen, but since taking out this citizenship you have become a permanent resident of country Y, so your domicile of choice is country Y. You are not a resident under this test.

The 183-day test

Where a person is present in Australia for 183 days or more 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 do not pass this test because your usual places of abode (country Z and later country Y) are outside Australia and you do not intend to take up residency in Australia.

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. 

As you were not a member of either of these funds you were ineligible to contribute to them, and you are not a resident under this test.

Your residency status

You are not a resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936. Therefore, you are not considered to be an Australian resident for tax purposes during the periods.

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