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Edited version of your private ruling

Authorisation Number: 1012398119765

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Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period:

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commenced on:

On or after 1 July 2012

Relevant facts and circumstances

You are a citizen of a foreign country A by birth and a citizen of Australia by naturalisation.

You also technically have citizenship of foreign country B due to both your parents having been born there, but you have never lived there.

Foreign country A is your country of origin but you regard Australia as your home.

You migrated to Australia from foreign country A several years ago.

Your spouse is Australian-born.

All of your spouse's close relatives live in the same Australian state.

You returned to foreign country A with your spouse on a date.

Currently, you are in the foreign country.

You have not visited Australia since your departure. You currently have a flight to Australia booked for a date. Whether this will be to return to Australia to live or just to visit will depend on the circumstances with your parents.

You expect that you will be in Australia for 183 days or more in each of the years of the ruling.

You have vacated your rented residence in Australia.

Currently, you have rented a unit in foreign country A. You have purchased some essential items. You are currently borrowing furniture, including washing machine and stove, from family and members of the local congregation.

You also have accommodation arranged in Australia which you can return to at any time either for a period of months or indefinitely.

You will be leaving the majority of your money invested in Australia in term deposit accounts. All of these accounts pay interest monthly which you will use to cover some of your living expenses overseas.

Your spouse and you both have superannuation funds held with a credit union in addition to your term deposit investments.

You have opened a cheque account for day to day transactions in foreign country A. It does not pay interest. You have no other assets in foreign country A.

You do not have an employment contract in foreign country A. You will be relying on the income from your Australian term deposit investments and from the work you will be doing for in Australia to provide for our living expenses in foreign country A.

You have been working for several years. You employer has changed your status to that of casual employee. As such you will continue, at their request, to provide them with services for up to 35 hours per week from overseas.

You anticipate that your Australian investments and your Australian work will provide the major proportion of your income.

You do not have any children. Your family (by marriage) in Australia are all Australian-born, reside in Australia and have no intention of joining you.

Your spouse and you are very actively involved with our community and their activities in numerous congregations in several states.

By marriage you have family living in several Australian cities. You have maintained close social contact with them.

You have not resided in foreign country A for more than short periods for many years. Your only social contacts in foreign country A are consequently with your family. You have a few other acquaintances from school-days and a few social connections in foreign country A.

You have recently applied for and been awarded membership with a professional organisation. You have taken this step because you intend your career to remain based in Australia.

Neither you nor your spouse is or was an employee of the Commonwealth of Australia Government.

You are over 16 years of age.

Relevant legislation provisions:

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

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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 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 satisfy 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'.

Taxation Ruling IT 2650 provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay.

The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states:

The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes.

As you expect to be living and working (albeit for an Australian employer remotely) in the foreign country, you cannot be said to be residing in Australia for the same period.

Therefore, you are not a resident of Australia under the resides 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 an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

In your case, as you are still an Australian citizen while living in foreign country, your domicile is Australia and remains unchanged.

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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

In your case, you have vacated your rented residence in Australia and have moved to foreign country A to care for ailing relatives. You have rented a unit in foreign country A until at least a date which you have furnished.

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

Therefore, you are not a resident under the domicile test.

The 183-day test

Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and that he or she does not intend to take up residence in Australia.

In your case, you expect that you will be in Australia for 183 days or more in each of the income years of the ruling. As you are will be present in Australia for a total period of more than half of a year of income, i.e. 183 days, and (although your usual place of abode is outside Australia) you intend to take up residence in Australia at some time in the future, you are considered to be a resident of Australia under the 183-day text.

The superannuation test

As you have passed 183-day test it is not necessary to consider the superannuation test.

Conclusion

As you are a resident of Australia under the 183-day test you have passed one of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes.

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