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This edited version has been archived due to the length of time since original publication.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

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Edited version of your private ruling

Authorisation Number: 1012529700521

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

Year ending 30 June 2014

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

Your country of origin is country X.

You and your family moved to Australia.

You are a citizen of both country X and Australia.

You work for an Australian employer and requested a transfer to country Y because your spouse had applied for a transfer with her company.

You are being paid by your Australian employer into your Australian bank account.

You are living with your spouse in a condominium in country Y that you lease.

You intend to renew the lease when it expires.

It is possible to extend your country Y employment for another six months if you wish.

You are planning to move to country X after your employment in country Y finishes.

Your spouse will follow you to country X but only after she gains a promotion which is expected about the time you move to country X.

Your Australian employment position is being held open for you and you are able to return at any time if you wish.

You are not sure when you may return to Australia to live.

You do not have any children.

You have parents and siblings who live in Australia.

Your spouse has no family in Australia.

You have relatives in country X.

You lived at your parent's house before you moved to country Y.

Since moving to country Y you have returned to Australia for periods of one week and three weeks for work and family related reasons.

You stay at your parent's house on your return visits to Australia.

You state that your plans for return visits to Australia over the next two years are difficult to assess but it may be once or twice a year to visit your family.

Your assets in Australian comprise of a superannuation fund, bank accounts and vehicles. You also have an Australian credit card.

You left some clothes and personal items at your parent's house.

Your assets in country Y include household effects.

You have not had your name removed from the Australian electoral roll.

You have not advised Medicare to have your name removed from their records.

Neither you nor your spouse has ever been employed by the Australian commonwealth government.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

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 source of employment income is generally the place where the employment duties are performed.

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 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'.

The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant:

In your case, you and your spouse left Australia to live and work in country Y. You have established rental accommodation in country Y and have no place of abode in Australia. You intend to work in country Y until next year and have no definite plans to return to Australia.

Although you have family and financial ties to Australia, consideration of the factors outlined above shows that you are no longer residing in Australia according to the ordinary meaning of the word.

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 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.

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.

In your case, your country of origin is country X and you moved from there to Australia and became a citizen of Australia. Therefore, you changed your domicile to Australia.

You are now living and working in country Y and intend to move to country X in the first half of 2014. As you are a citizen of country X and you have no definite plans to return to Australia, your domicile will now revert to country X.

Therefore, you are not a resident of Australia 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 have not been physically present in Australia for more than 183 days in any year since you left Australia, you are not a resident 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 neither you nor your spouse have ever been employed by the Australian commonwealth government and are not eligible to contribute to the PSS or the CSS.

Summary

As you are not an Australian resident for taxation purposes under any of the tests of residency, you are not an Australian resident for taxation purposes from the time you moved to country Y.

As you not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes only income derived from an Australian source. 

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