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Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for income tax purposes?

No.

This ruling applies for the following periods

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on

1 July 2011

Relevant facts and circumstances

Your country of origin is country X and you are a citizen of both Australia and country X.

You left Australia for country X with your spouse and children in late 2010.

You had been offered employment in country X and you wished to be near your ageing parents.

You initially stayed with family and friends in country X and moved into rental accommodation in early 2011. You are still living in this accommodation.

You returned to Australia in mid 2012 to visit family and to pursue employment opportunities.

You were offered longer term employment in country X and you left Australia after a stay of approximately four weeks.

You and your spouse are residents of country X for income tax purposes.

You intend to stay in country X indefinitely but not permanently.

Your only Australian asset is a bank account.

Your assets in country X comprise of bank accounts and small investments.

You do not have a place of residence in Australia.

You maintain strong family and social connections in both Australia and country X.

Neither you nor your spouse is employed by the Australian Commonwealth government.

Relevant legislative provisions

Income Tax Assessment Act 1997 - section 6-5

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 within the tax provisions. 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 (IT 2650).

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 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. 5th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'.

In your case, you have been working in country X and living with your family in the same residence in country X for the entire financial year ending 30 June 2012, and also for the majority of the current financial year ending 30 June 2013.

Based on the above, you are not residing in Australia according to the ordinary meaning of the word and do not meet 'the resides' test. You are not a resident of Australia under this test.

The domicile test

Under this test, a person is a resident of Australia for income tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases. Domicile is the place that is considered by law to be your permanent home. Domicile by origin is attributed to individuals at birth and is usually decided according to the domicile of the person's father.

In your case, you were born in country X, are a citizen of both Australia and country X and are living and working in country X. Therefore, your domicile by origin is country X and you have maintained this domicile.

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

The 183 day test

In your case, you were not in Australia for more than 183 days in the financial year ending 30 June 2012 and you will not be in Australia for more than 183 days in the current financial year ending 30 June 2013.

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

The superannuation test 

An individual is considered to be an Australian resident for income tax purposes if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. 

You are not a resident under this test as you and your spouse are not employed by the Australian Commonwealth government.

Your residency status

You are not a resident of Australia for income tax purposes for the financial years ended 30 June 2012 and 30 June 2013 as you did not meet any of the tests of residency.

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