Edited version of your written advice

Authorisation Number: 1012665177360

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following period

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commences on

1 July 2013

Relevant facts and circumstances

You were made redundant by your employer in Australia.

You purchased an apartment in the country X.

You left Australia to accept a 6 month contract role in country Y.

You are on a temporary work visa and work permit in country Y.

You are able to reside in country X permanently provided that you renew your visa as required and exit and re-enter the country at least every 14 months.

You work for a company in country Y on a fly in fly out basis. You perform 4 weeks on site followed by 2 weeks offsite. You return to your apartment in country X on your breaks.

At the conclusion of the contract you intend to retire permanently in country X.

You separated from your spouse in 20XX and have applied for divorce.

Your current partner resides in country X.

You have a 20 year lease and power of attorney (POA) on a block of land in country X. This is because you are unable to purchase land in your own name; you have put the land in your partners name but have a lease and POA to protect your interest.

You have an option to extend the lease and POA for 25 years.

The lease and POA entitled you to occupy the land and make any improvements to it. You will have ownership rights to any improvements or buildings.

You have signed a lease to rent out your former residence in Australia. You intend to sell the property in the coming years.

You cancelled your telephone and internet connection when leaving Australia.

You notified your private health insurer of leaving Australia and suspended your account indefinitely.

You have not notified Medicare that you have left Australia.

You have not notified the Australian Electoral Commission that you have left Australia.

You have X children in Australia. You intend to fly back to Australia occasionally to visit them.

Relevant legislative provisions

Section 995-1(1) of the Income Tax Assessment Act 1997

Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936, which provides four tests to ascertain whether a taxpayer is an Australian resident for income tax purposes. These tests are:

1. The resides test;

2. The domicile test;

3. The 183 day test; and

4. The superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia.

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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. 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'.

In your case, you are living in an apartment you bought in country X. You live there with your partner. You perform work in country Y on a fly in fly out basis, meaning that you live at your apartment for 2 weeks before being away for 4 weeks. You have no plans to return to Australia.

Based upon the above facts, you are not residing in Australia according to the ordinary meaning of 'reside' and therefore you are not a resident of Australia under this test.

The domicile test

Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

Domicile

'Domicile' is a legal concept to be determined according to the Domicile Act 1982 and common law rules. The courts have defined it as the legal relationship between a person and a territory subject to a distinctive legal system that invokes that system as the individual's personal law (Henderson v Henderson [1965] 1 All ER 179 at 180-181).

A person's domicile is in their country of origin unless they acquire a different domicile by choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice.

Your domicile of origin is Australia. You have not acquired a new domicile of choice in country X as you have not become a permanent resident there and are still required to renew your visa regularly. This involves a requirement to leave and re-enter the country.

Permanent place of abode

The leading authority on the meaning of 'permanent place of abode' is Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1; 9 ATR 899 (Applegate), which says that a person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case.

In Applegate, the court found that 'permanent' does not mean everlasting or forever but it is to be contrasted with temporary or transitory.

The courts have considered 'place of abode' to refer to a person's residence, where he lives with his family and sleeps at night.

In Applegate, Fisher J made the following comments when analysing the expression 'permanent place of abode':

To my mind the proper construction to place upon the phrase 'permanent place of abode' is that it is the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place.

In your case you:

• purchased an apartment, that you live in, in country X

• acquired an interest in land that intend to build a house to retire to in the country X

• have no assets in Australia aside from a rental property that you intend to sell in the coming years

• have a partner who lives in your apartment in country X

Based on the reasons discussed above and all of the facts of your circumstances, the Commissioner is satisfied that you have a permanent place of abode in country X. Therefore, you are not a resident of Australia under this test from the time you left Australia.

The 183 day test

When a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

In the year ended 30 June 20X you spent more than 183 days in Australia. In this time, the Commissioner is satisfied that your usual place of abode was outside Australia from the time you departed. Therefore you are not a resident of Australia under this test from that date.

The Superannuation test

An individual is still considered to be a resident 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 and your spouse are not contributing members of the PSS or CSS. Further, you and your spouse are over 16 years of age. Therefore, you are not a resident under this test.

Your residency status

You are not a resident of Australia under any of the above tests from the time you departed Australia.

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