Edited version of your private ruling

Authorisation Number: 1012559450167

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes from the date you left Australia?

No.

This ruling applies for the following periods

Year ended 30 June 2013

The scheme commences on

1 July 2012

Relevant facts and circumstances

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

You worked with your Australian employer for several years before obtaining a permanent transfer to a country X office of the company.

During the relevant income tax year you worked for your Australian employer for a short time (less than 183 days).

You left Australia and entered country X with a temporary visa.

You intend to renew your temporary visa until you are able to apply for permanent residency of country X.

You have a work permit which allows you to work in country X.

You intend to live in country X for up to ten years for personal and professional reasons.

Your overseas employer has not provided you with accommodation.

You initially stayed with relatives in country X and you are now renting your own accommodation.

You have purchased household furnishings for your accommodation.

Your assets in country X include a bank account, another asset and the household furnishings you purchased in country X.

You have a country X credit card and a department store credit card.

In country X you are a member of several sporting/fitness organisations.

In Australia, you have a share in a house you own with a relative. Your relative lives in this house.

You have a small mortgage that relates to your ownership share of the house.

You are remitting part of your salary to Australia to pay off the mortgage as soon as possible.

Your other assets in Australia include a superannuation account, a bank account and a small share portfolio.

You sold your motor vehicle and household effects prior to leaving Australia.

Prior to leaving for country X you were renting your own accommodation for several years.

You made a short return visit to Australia.

You have had your name removed from the Australian electoral role.

You have advised your bank and financial institutions you have investments with that you are a foreign resident.

You have cancelled your health insurance and had your name removed from Medicare records.

The reason you gave for going overseas on the Australian immigration outgoing passenger card was 'permanent work contract'.

You have never been employed by the Australian Commonwealth Government. You are over 16 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1)

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

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 'resides' test;

· the 'domicile' and 'permanent place of abode' test;

· the 183 day test; and

· the Commonwealth superannuation fund test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes it's ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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:

· physical presence in Australia;

· nationality;

· history of residence and movements;

· habits and 'mode of life';

· frequency, regularity and duration of visits to Australia;

· purpose of visits to or absences from Australia;

· family and business ties with Australia compared to the foreign country concerned; and

· maintenance of a place of abode.

The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive.

In your case, there are various factors that indicate you have ceased to reside in Australia. Specifically;

· You intend to live and work in country X for up to ten years

· Although you will remain an Australian citizen, you intend to apply for permanent residency in country X;

· You lived in rented accommodation for several years before leaving Australia. You now renting your own accommodation in country X;

· You have sold your Australian vehicle and furniture;

· You have cancelled your health insurance and had your name removed from Medicare records and the Australian electoral role;

· You have a job in country X;

· You have a credit card and department store card, and membership of some sporting/fitness organisations in country X;

· You have returned to Australia only once for a short time;

· You have relatives in Australia and country X; and

· You have no place of abode in Australia;

Although you have family and some 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

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 to prove an intention to make his or her home indefinitely in that country.

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

You have now moved to country X to live for up to ten years and intend to apply for permanent residency. However, your presence in country X is currently dependent on a temporary visa. Therefore, your domicile remains Australia.

Permanent place of abode

It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.

The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that "a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression."

A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller.

In your case, as mentioned above, you intend to live and work in country X for up to ten years and apply for permanent residency. You have cut many of your ties to Australia, have no place of abode in Australia and have established your own accommodation in country X.

Therefore, the Commissioner is satisfied that you have established a permanent place of abode outside of Australia.

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 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 in the year, 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. Only employees of the Commonwealth Government are eligible to contribute to these schemes.

You are not a resident under this test as you have never been employed by the Commonwealth Government, and you are over 16 years of age.

Summary

As you are not an Australian resident for income taxation purposes under any of the tests of residency, you are not an Australian resident for taxation purposes from the date you left Australia.

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