Edited version of your private ruling

Authorisation Number: 1012417865437

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for income tax purposes?

Answer

No.

This ruling applies for the following periods:

1 July 2012 - 30 June 2013

1 July 2013 - 30 June 2014

1 July 2014 - 30 June 2015

1 July 2015 - 30 June 2016

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You were born in Country A.

You are a citizen of Country A and Australia.

You have been a resident of Australia for a long time.

You returned to Country A in late 2010 to care for your elderly parents.

You intend to return to Australia, but the date of your return is dependent on the health of your parents.

You care for and live with your parents in Country A.

You terminated the lease on your previous rental property in Australia.

Your assets overseas include a bank account and a car.

Your assets in Australia include a bank account, credit cards, a car, boat, and a superannuation account.

You are not working in Country A.

You returned to Australia for the first time in late 2012, and intend to return to Country A in early 2013.

You intend to return to Australia for approximately a few weeks at the end of 2013. You intend to return to Australia for approximately X weeks at a similar time in each subsequent income year.

You have no social or sporting connections in Country A.

You are a member of the X and the Y sporting clubs in Australia.

You are more than 16 years of age.

You were a Commonwealth Government employee, and a member of the CSS, but you are no longer an eligible employee.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Residency for taxation purposes - general

Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 resides test,

· the domicile (and permanent place of abode test),

· the 183 day test, and

· the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered.

If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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 - Income tax: residency - permanent place of abode outside Australia adopts principles and guidelines which can also be used for individuals who intend to reside overseas indefinitely. It states in paragraph 19:

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.

In your case, you have lived in Country A since late 2010. This is a considerable length of time.

Your length of physical absence from Australia and the surrounding circumstances are not consistent with residing in Australia. You previously rented a home while living in Australia, but gave up this rental arrangement when you moved to Country A. You are living with your parents on a full-time basis in Country A in their home.

Accordingly, you are not considered to be residing in Australia and, therefore, are not a resident of Australia under the resides test during the income years in question.

The domicile and permanent place of abode test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied the person's permanent place of abode is outside Australia.

A person's domicile is generally their country of birth. This is known as a person's domicile of origin. A person's domicile of origin will not usually change but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

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.

We consider that your domicile of choice became Australia when you became a Australia citizen.

Taxation Ruling IT 2650 specifies that a person with an Australian domicile who is living outside Australia will retain their Australian domicile if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency' - at the end of a specific period of time for example.

In your case, although your intention is to return to Australia, the date of return to Australia permanently is undetermined, and is dependent on the health of your parents. Accordingly, we consider that you have maintained your Australia domicile. Therefore we need to consider whether you have established a permanent place of abode in Country A.

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.

Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include:

· the intended and actual length of the taxpayer's stay in the overseas country

· whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time

· whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia

· whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence

· the duration and continuity of the taxpayer's presence in the overseas country and

· the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

In your case:

· you plan to return to Australia, but your length of time in Country A is undetermined, as it is dependent of the health of your parents

· you live with your parents full-time in Country A

· you previously rented a home in Australia, however this ended when you moved to Country A.

· you do not have a spouse or children in Australia.

· you have not joined any clubs in Country A.

· you have maintained your car, boat, bank accounts and credit cards in Australia.

· you ceased working for your employer

Considering the above information the Commissioner is satisfied that you have established a permanent place of abode in Country A, and accordingly you are not a resident of Australia for taxation purposes under the domicile test.

The 183-day test

Where a person is present in Australia for 183 days (i.e. half of the income year) 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 will not be a resident of Australia for taxation purposes under this test because you will not be in Australia for more than 183 days during the income tax years in questions. Based on your absence from Australia, you will not be a resident of Australia for taxation purposes under this test for the 2013-14, 2014-15 and 2015-16 income years.

The superannuation test

Under this test, an individual will be considered a resident of Australia for taxation purposes if:

1. they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990,

2. they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976, or

3. they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

In your case, you are over the age of 16, and you are a member of the CSS. However, you are not an eligible employee of the Commonwealth. Accordingly, you are not a resident of Australia for taxation purposes under this test.

Conclusion - your residency status

You are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997 in the 2012-13, 2013-14, 2014-15 and 2015-16 income tax years.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).