Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012419967707

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 status

Question and answer:

Are you a resident of Australia for income tax purposes?

No.

This ruling applies for the following period:

Year ended 30 June 2013

The scheme commenced on:

On or after 1 January 2012

Relevant facts

You were born in Australia and are a citizen of Australia and country C.

You are single with no dependants.

You are employed by an Australian Government organisation.

Through your Australian employment you have secured an employment contract with the Government of country B for an extended period.

Your employment in country B is essentially foreign aid work.

You left Australia and moved to country B.

You arrived in country B on an employment Visa.

On arrival in country B you set up a fixed residential home, purchased a motor vehicle and acquired a country B driver's licence.

In addition you have pets that reside with you at your home.

You receive a wage from both your Australian and country B employers.

You currently have a number of employment contracts, one with your Australian employer and the other with the government of country B.

Your contract with the country B does not have a provision for extension however through informal discussions you have been told that an extension would be straightforward to attain.

Your contract with your Australian Government also does not have a provision for an extension however you are yet to engage in any formal or informal discussions.

During the period that you will be living and working in country B you intend to return to Australia for a short period to visit your parent and attend a function.

When in Australia you will be staying with your parent who continues to reside in Australia.

Prior to your departure from Australia you were renting a residence with friends.

The assets that you hold in Australia consists of;

Due to the uncertainty of your next destination you have left these assets in place in Australia.

The assets that you hold in country B consist of a motor vehicle and a bank account.

The income that you derive from country B is banked into your country B bank account and used for every day living expenses, while the income that you receive from your other employer has remained in an Australian bank account.

The social and sporting ties that you have in Australia consist of family and friends.

The social and sporting ties that you have in country B consists of;

As a consequence of your Australian employment you are a member of an Australian superannuation fund (not PSS or CSS).

You have continued to make automatic contributions to the fund while you have been living and working in country B.

After completing your employment contract in country B not withstanding any extension, you are intending to seek employment with an international organisation overseas.

Your other parent lives overseas and you are fluent in the language of the particular country you are intending to seek employment. You also have friends that work for the international organisation overseas.

In addition you have extended family that lives in nearby country C.

You have no intention of returning to Australia.

Relevant legislative 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: 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 first question to be asked in considering the residency status of a person 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 apply any of the other tests. The person is a resident of Australia for income tax purposes.

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 left Australia to live and work in country B for a considerable period of time. Since you are physically present in country B during this period, you are not considered to be residing in Australia according to ordinary concepts under this test. Therefore, you are not a resident of Australia for income tax purposes under the 'resides test'.

Accordingly, 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.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. 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. From the information that you have provided, you have not demonstrated an intention to become a citizen or resident of country B and have remained a citizen of Australia and the country C. As you were living and working in Australia prior to your departure to country B, it is considered your Australian domicile has remained 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.

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.

For the period after you left Australia your circumstances were the following:

Based on these facts, it is therefore considered that you have established a permanent place of abode in country B, particularly given that you have established long term accommodation and a network of social and sporting ties. Further, it is not your intension to return to Australia once your country B employment contract is complete.

Accordingly, you are not an Australian resident under the domicile test.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent of abode is outside of Australia and they have no intention of taking up residence here.

From the information that you have provided you will not be physically in Australia for a period greater than 183 days for the period included in this ruling.

Therefore, you are not a resident of Australia under the 183 day test for this period.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

In your case, although you are an employee of an Australian government organisation you are not a member of either the PSS or CSS superannuation schemes.

Therefore, you are not a resident of Australia under the superannuation test.

Your residency status

Accordingly you are a resident of Australia from the period that you departed Australia, under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.

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).