Edited version of your private ruling

Authorisation Number: 1012586619961

Ruling

Subject: Residency for tax purposes

Question and answer

Are you a resident of Australia for tax purposes?

No.

This ruling applies for the following periods:

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You were born in Country X.

You arrived in Australia as a student a number of years ago, and then later became a permanent resident, and then an Australian citizen.

You gave up your Country X citizenship in order to become an Australian citizen.

Your parent recently passed away in Country X.

Upon your parent's death, you inherited shares in a Country X company and became the company's senior officer.

You intend to live and work in Country X.

You intend to live in your family home in Country X.

You will take all your personal belongings to Country X.

You have not retained any residence in Australia.

You have sold all of your investment properties in Australia, however, you are the beneficiary of a trust which owns vacant land.

You intend to sell your car in Australia.

Your child will remain in Australia with your former spouse.

You will maintain an Australian bank account for the purpose of transferring funds for your child's expenses.

You do not intend to renounce your Australian citizenship as you expect to return to Australia to live at some time in the future, but you have no fixed intention as to when.

You intend to visit your child from time to time. You will stay in hotels or serviced apartments when you visit Australia. You intend to spend most of your time travelling around Australia with your child.

You enter Country X on a residency visa which is renewable annually. There is no limit on how many times you can renew the visa.

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 resides test,

· the domicile test,

· the 183 day test, and

· the superannuation test.

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. 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'.

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 are no longer residing in Australia for the following reasons:

· you have returned to Country X, your country of origin, to live indefinitely

· you live in your family home in Country X

· you are the senior officer of a company in Country X

· you have abandoned any residence you previously had in Australia

· the purpose of any return visits to Australia are for the purpose of visiting your child who lives in Australia with your former spouse

Therefore, as you are no longer residing in Australia according to the ordinary meaning of the word, 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.

Your domicile is Australia because you are an Australian citizen and you do not intend on renouncing your Australian citizenship.

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.

Paragraph 23 of IT 2650 sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode:

(a) the intended and actual length of the taxpayer's stay in the overseas country;

(b) whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c) whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

(d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

(e) the duration and continuity of the taxpayer's presence in the overseas country; and

(f) the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

In your case, the Commissioner is satisfied that you have a permanent place of abode outside of Australia as you are living in your family home in Country X and you intend to live there in definitely, and although your residency visa is only annual, you are able to renew this each year indefinitely.

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 were not 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 you have never been a Commonwealth government employee 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 are not a resident of Australia for tax purposes.

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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