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Ruling

Subject: Residency - Leaving Australia

Question and answer:

No.

This ruling applies for the following periods:

Year ended 30 June 2007,

Year ended 30 June 2008,

Year ended 30 June 2009,

Year ended 30 June 2010,

Year ended 30 June 2011,

Year ended 30 June 2012,

Year ended 30 June 2013,

Year ended 30 June 2014,

Year ended 30 June 2015,

Year ended 30 June 2016.

The scheme commenced on:

1 July 2006.

Relevant facts:

You are a citizen of Australia.

Your country of origin is Australia.

You departed Australia in X.

You have a working visa - Permission to work and live overseas.

The purpose of your visit overseas is to live and work.

You intend to return to Australia in Y years time to live permanently.

You return to Australia every year for less than a number of months. This depends on other travel plans. You visit family and friends annually.

Overseas, you and your spouse have a rented apartment to live in for as long as you living and working overseas.

You have an overseas bank account for your wages to be paid into.

You have a work contract which can be extended, with an indefinite extension date.

You have a spouse who has accompanied you overseas.

Family and friends live in Australia.

Overseas you participate in fitness and sporting competitions.

Neither you nor your spouse, have ever been a Commonwealth Government employee.

You pay tax overseas.

You have also previously paid tax in Australia at resident rates.

Assumptions:

N/A

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1936 Subsection 6(1).

Superannuation Act 1990

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:

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 will 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 and spouse are have resided overseas since X as evidenced by:

Therefore, you are not considered to be residing in Australia under the resides test.

The domicile test and permanent place of abode 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 persons domicile is established at birth when they acquire a domicile of origin, being the country of their fathers permanent home. The domicile of origin is retained until such time as a domicile is established by choice or by operation of law in another country.

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. A domicile may be changed by operation of law for example where a person has obtained a migration visa.

You have not indicated a permanent intention to change your domicile from Australia as you although you are living and working overseas, with financial and personal connections, you have not made efforts to change you domicile from Australia via legal or other means. You are only entitled to live overseas whilst you are working as per your overseas VISA.

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,

Therefore, you are considered to have established a permanent place of abode overseas.

The 183-day test

You are not a resident under this test as you will not be physically present in Australia for more than 183 days in any of the income years.

The superannuation test

A taxpayer will be considered to be a resident of Australia if they are a 'member' of the superannuation scheme established by deed under the Superannuation Act 1990. The Public Service Superannuation Scheme (PSS) was a superannuation scheme established by deed under the Superannuation Act 1990.

Neither you nor your spouse, have never been a Commonwealth Government Employee.

Your residency status

You are not considered an Australian resident under the:

Note: As per Section 6-5 of the ITAA 1997 even where an individual becomes a non-resident, the remuneration they receive in Australia located in Australia will be assessable by the taxpayer in Australia at non-resident rates for the relevant income years.

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