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Edited version of your private ruling
Authorisation Number: 1012429771042
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Ruling
Subject: Residency status
Question and answer:
Will you be a resident of Australia for income tax purposes?
No.
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:
1 July 2012
Relevant facts
You were born in Australia and are a citizen of Australia.
You have a spouse who is a country X national.
You intend to leave Australia permanently to work for a company incorporated in country X.
The structure of the company that you will be working for is such that ZXY Trust (with which you are the sole trustee), will own a company incorporated in country X.
The company will be the sole distributor for a world wide distributor, company Z representing a country T manufacturer.
Although the trust was established in Australia, it will be administered in country X. To facilitate the administration you have found an accountant in country X.
You intend to depart Australia accompanied by your spouse.
When you depart Australia with your spouse you will have no immediate family in Australia.
When you arrive in country X, you will do so under a partner visa and working visa which are renewed yearly.
Prior to departing Australia you intend to;
· send your personal items to country X, with any remaining items being disposed of;
· dispose of your half share of a residence in Australia;
· close your Australian bank accounts and superannuation;
· dispose of your motor vehicle and cancel your health insurance; and
· Remove yourself from the electoral role.
Once you leave Australia you will not you will not have any Australian memberships, utilities, internet plans or any other contractual commitments.
You will also not have any social or sporting connections to Australia.
You intend to lease a residence for a period before purchasing a property.
You do not have any assets overseas.
As a result of your previous employment you were a contributing member of the PSS. You are no longer an eligible employee.
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 resides test
· the domicile test
· the 183 day test
· the superannuation test.
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 intend to leave Australia permanently to live and work in country X. Since you will be physically present in country X permanently from the time that you depart Australia, you will be not considered to be residing in Australia according to ordinary concepts under this test after you leave.
Accordingly, you will not be 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, although you have not demonstrated an intention to become a citizen or resident of Thailand it is considered that your intension is to make Thailand your home indefinitely. As you intend to live permanently in country X, it is considered that you have adopted country X as your domicile of choice.
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 depart Australia your circumstances will be following:
· you intend to leave Australia permanently to live and work in country X;
· you will be employed indefinitely in country X;
· you will be accompanied by your spouse who is a country X national;
· you intend to rent long term accommodation in country X with a view to purchasing a home;
· you intend to dispose of all of your Australian assets prior to your departure; and
· you do not intend to return to Australia.
Based on these facts, it is therefore considered that you will establish a permanent place of abode in country X, particularly given that you will establish long term accommodation and employment. Further you have no the intension of returning to Australia after your departure.
Accordingly, you will not be a resident of Australian for income tax purposes 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 depart Australia permanently. Therefore as you will not be physically in Australia from this date you will cease to be a resident of Australia for income tax purposes once you depart.
Accordingly, you will not be a resident of Australian for income tax purposes under the 183 day test.
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 were an employee of the Commonwealth Government of Australia and subsequently a member of the PSS, you ceased to an employee. As you are no longer an employee of the Commonwealth Government of Australia you are no longer a contributing member of the PSS.
Therefore, as you are no longer an eligible employee or contributing member of the PSS, you are not a resident of Australia for income tax purposes under the superannuation test.
Your residency status
Accordingly once you depart Australia you will cease to be a resident of Australia for income tax purposes, under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.
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