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This edited version has been archived due to the length of time since original publication.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: 1012480448115

Ruling

Subject: Your residency status

Question and answer

During your secondment to Country X will you be a resident of Australia for tax purposes?

No.

This ruling applies for the following periods:

Year ending 30 June 2015

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a citizen of Country X.

Your spouse is a citizen of Country X.

You are not a citizen of any other country.

You moved to Australia in 2011 with your spouse.

You have not become an Australian citizen or applied for permanent residency here.

You have been seconded back to Country X for 12 to 18 months. Your spouse will be accompanying you to Country X.

In Australia you are living in rental accommodation which is not sponsored by your employer.

Most of your assets, including your family home, bank accounts and shares are back in Country X.

Your family home in Country X is currently being rented out and you will not be returning to it when you return to Country X. You will be renting a house in Country X.

Most of your family is in Country X including one of your children, your siblings and your parents.

Neither you nor your spouse has ever been employees of the Australian government.

You have rental properties in Australia.

You have minimal social and sporting ties with Australia

Once your secondment finishes in Country X you will be returning to Australia with the intention of staying here permanently.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

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 in subsection 6(1) of the Income Tax Assessment Act 1936 (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 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. 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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.

In your case you will be returning to Country X to live and work there. You have a strong association with Country X. You are a citizen of Country X. You grew up there and most of your extended family is there. You have significant assets there including your old family home, bank accounts and shares. You will not maintain many ties in Australia.

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

The domicile test

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

Domicile

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. It is usually something more than a place of residence.

You can take steps to change your domicile but a considerable amount of proof is needed to establish a change.

You are a Country X citizen and your domicile is Country X as you were born there and you grew up there. During your stay in Australia you did not take any steps to change your domicile to Australia. You have not applied for permanent residency or citizenship here.

Therefore you are not an Australian resident under this 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 place of abode is outside of Australia and they have no intention of taking up residence here.

As you will not be physically present in Australia for more than 183 days you are not a resident of Australia under this test.

The superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds:

established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or

established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or

the spouse or child under 16 of a person covered by either of the above funds.

As neither you, nor your spouse, have ever been Commonwealth government employees and therefore you are not able to contribute to the abovementioned superannuation schemes and are not a resident of Australia under this test.

Your residency status

As you do not meet any of the above tests, you will not be a resident of Australia for tax purposes during your secondment.

As you are not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income only includes income gained from sources in Australia.

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