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Ruling

Subject: Residency

Question:

Are you a resident of Australia for taxation purposes?

Answer:

No

This ruling applies for the following periods:

Year ended 30 June 2012.

The scheme commences on:

1 July 2011.

Relevant facts and circumstances

You are an Australian citizen

You are working on a yearly contract basis in Country A with one of the governments organisations on a Specialist in Humanities/International services" visa.

This is a three year renewable visa.

You commenced employment in Country A during the 2012 income year and renewed your contract for a further year on the twelve months later.

You intend to renew your contract for a further year or more but not necessarily with the same employer.

You do not own any property in Australia.

You pay rent on a government owned apartment in Country A.

You pay tax on your income in Country A.

You have a partner in Country A but are not engaged nor married. You do not have any family members in Country A and you are not a dependent.

You have a bank account in Australia.

You have a HELP debt in Australia which you are make voluntary payments towards on the internet.

You received a PAYG summary from your previous employer in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 6(1).

Income Tax Assessment Act 1997 Section 6-5.

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 resides test

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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

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 do not meet the resides test as you have not being living in Australia during your absence, you have been living with your partner overseas.

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 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.

You have not taken any steps to change your domicile to another country.

You do not own a house in Australia. You are renting accommodation in Country A.

You are living with your partner in the apartment in Country A

The commissioner is satisfied that you have established a permanent place of abode outside Australia. You are not a resident under the domicile test

.The 183-day test

When a person is present in Australia for 183 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.

This test does not apply to you as you have not been present in Australia for more than 183 days during your absence.

The superannuation test

An individual is still considered to be an Australian resident for tax purposes if that person is eligible to contribute to a Commonwealth superannuation scheme such as the PSS or the CSS, or that person is the spouse or child under 16 of such a person.

You do not meet the eligibility requirements to contribute to the PSS or CSS.

Your residency status

In your case, you are not an Australian resident for tax purposes under any of the tests or residency outlined in subsection 6(1) of the ITAA 1936.

Accordingly, you are a non resident from the date of your departure from Australia.

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