Edited version of your private ruling

Authorisation Number: 1012562601934

Ruling

Subject: Residency and assessability of income

Question 1:

Are you a resident of Australia for taxation purposes for the financial year ending 30 June 2013?

Answer:

No

Question 2:

Should your income from university be assessable in Australia for the financial year ending 30 June 2013?

Answer:

No

This ruling applies for the following period:

Year ending 30 June 2013

The scheme commences on:

1 July 2012

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 were born in Country A.

You have permanent residency of Australia.

You left Australia and your destination was Country A.

You do not require a visa to stay in the country and are able to stay permanently in the country

Prior to leaving Australia, you lived in a rental property with your partner and children.

You do not have a place to live in Australia

You formed an intention to make your home outside of Australia.

You do not intend to return to Australia and have not been back since your departure.

You hold a casual part-time time position as a research officer.

You employer is the employer B.

You are a member of a research team at employer B and assist the members from the overseas country.

You have lodged tax returns in the overseas country and have provided copies of tax assessment

You purchased a residence overseas.

You shipped all belongings from Australia to the overseas country.

You children stay with you in the overseas country and are citizens of the country.

Your partner has not accompanied you.

You do not have any assets in Australia except for a bank account into which your salary is paid.

In Australia you have limited social connections and no sporting connections

In the overseas country you have family connections and no sporting connections.

You and your spouse have never been a Commonwealth Government of Australia employee for superannuation purpose.

You name has never been on the electoral roll.

You have advised your Australian financial institution that you are a foreign resident so that non resident withholding tax can be deducted.

You have advised Medicare or health insurance provider to have your name removed from their records.

When completing the Australian Immigration Outgoing passenger card you stated 'leaving Australia permanently - moving back home to the overseas country as your reason for going overseas.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 6

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Reasons for decision

Generally 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 and provides four tests to ascertain the residency status.

Relevant to your situation are the first two tests which are examined in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia, a copy of which is available from www.ato.gov.au.

Given regard to your circumstances as a whole and a consideration of the relevant residency tests, it is accepted that you are not a resident of Australia for tax purposes.

Taxation of non-residents

Subsections 6-5(3) and 6-10(5) of the ITAA 1997 provide that the assessable income of a non-resident only includes the ordinary income derived plus statutory income from all Australian sources.

The concept of source is of fundamental importance in determining a non-resident's liability to tax in Australia. This is because a non-resident is only assessable on income which has a source in Australia or that a provision deems assessable on some other basis. 

In the case of an ordinary contract for employment, the source of the income generally depends upon the place where the work is performed. Consequently, in most salary and wage cases, the source of the income will be the place where the work was performed.

Based on your circumstances, your income is foreign sourced.

As you are a non-resident of Australia for taxation purposes, your foreign sourced income is not subject to Australian tax.

Therefore your employer does not have to withhold tax.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).