1051208385134 | Legal database

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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1051208385134

Date of Advice: 29 March 2017

Ruling

Subject: Residency status

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20xx

Year ending 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

You were born in Australia and are a citizen of Australia.

You have lived overseas for a number of years.

You currently live in City A, Country A with your spouse.

Your spouse accompanies and lives in the same location as you.

You have no children.

You undertake work contracts with different employers in different countries every few years.

You are currently working in City A, Country A.

You held a working contract in City B, Country B for a period of time.

You were working in City C, Country C for a period of time.

You were working in City D, Country D for a period of time.

You were working in City E, Country E for a period of time.

You were working in Country F and City G, Country G for a period of time

Prior to 20xx you were living and working in Country R.

You have held permits in all countries that you have resided in.

Your accommodation in each country is arranged by your employers.

Your accommodation is for your sole use, under your name and paid for by your employer.

Your employer pays local country income tax on your behalf and arranges for any necessary income tax requirements to be completed.

You do not have a position being held for you in Australia.

You spend a short period of time in Australia visiting family.

You do not own property in Australia or anywhere in the world.

You have no assets in Australia other than investments held through a trading account.

You had not advised Medicare that you were leaving Australia however you have not claimed or used Medicare services since you had left Australia.

Both you and your spouse are not members or eligible employees of a Commonwealth Superannuation Fund.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1) and

Income Tax Assessment Act 1997 subsection 995-1(1).

Reasons for decision

These reasons for decision accompany the Notice of private ruling.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Summary

Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes 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. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:

The resides test,

The domicile test,

The 183 day test, and

The superannuation test.

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

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'.

In your case you have worked overseas consistently and have maintained a residence in the foreign countries where you were undertaking your working contracts. You have no residence to return to in Australia that would be considered to be your permanent home.

Based on the facts of your case, the Commissioner accepts that you do not reside in Australia according to ordinary meaning of the word; therefore, you are not considered to be a resident of Australia for taxation purposes 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.

Generally speaking, persons leaving Australia would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile by choice or by operation of law.

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.”

In your case:

You have undertaken various working contracts outside of Australia and you are residing in those locations;

You have a home in the country that you are working in, that you return to after occasional visits to Australia and that residence is available solely for your use;

Your spouse resides with you in the same country that you are working in;

Your personal assets are maintained in the location that you are currently working in; and

You do not have a permanent place of abode in Australia

Based on these facts, it is therefore considered that you have established a permanent place of abode outside of Australia.

The 183-day test

Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that your usual place of abode is outside Australia and you have no intention to take up residence here.

In your case you have taken various overseas working contracts and have made only short infrequent return visits to Australia.

As a result, you have not satisfied this test.

The superannuation test

You will be a resident if you are eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or you are the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

You have advised that you and your spouse are not contributing members of a Commonwealth Superannuation fund.

Therefore, this test does not apply to you.

Your residency status

Based on the facts you have provided, we can conclude that you do not satisfy any of the tests of residency.

Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

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