Edited version of private ruling

Authorisation Number: 1011470559055

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Ruling

Subject: Residency

Question:

Are you a resident of Australia for tax purposes for the period of your work contract?

Answer:

No

Detailed reasoning

Residency

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:-

· Residence according to ordinary concepts test

· Domicile and permanent place of abode test

· 183 day test

· Commonwealth superannuation fund 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 satisfy the conditions of one of the other three tests.

Residence according to ordinary concepts

The ordinary meaning of the word 'reside' according to the Macquarie Dictionary, 2001, revised 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'.

Taxation Ruling TR 98/17 considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

In your case, you are not considered to be residing in Australia as your behaviour does not reflect the required degree of continuity, routine or habit that is consistent with residing here. This is because:-

· During 2010, you came to Australia after completing a 5 year overseas contract.

· Within a short period from your arrival in Australia, you were relocated to the Country X for a 3 year contract that could extend to 6 years.

· You do not earn any income from Australia although you still hold a joint account with your spouse who resides in Australia and did not join you due to the safety issues in the Country X.

· You obtained permanent residency in the Country X so that you can legally reside there for the duration of the contract. You will reside in the main location provided by your employer at their expense; however, it will be your responsibility to provide for your accommodation when travelling to other countries as required by your employment contract.

· Because you do not have a regular work schedule, you could not take your spouse along with you. However, you will reconsider your spouse's position in terms of joining you overseas should your circumstances change.

· Because your role in the Country X is full time, you do not plan to visit Australia regularly, ie not fly in/fly out situation

Domicile and permanent place of abode

If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives.

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.

In your case, you are a Country B subject with a Permanent Australian Residency as you are married to an Australian. Therefore, you are considered to have maintained your country B domicile. Also, there is no evidence of an intention to make your home indefinitely in the Country X.

However, you have established permanent residence in the Country X and hold a permanent resident visa in the Country X. Your children are not dependent on you; it was not possible to locate your spouse with you to the country X due to safety issues in the Country X .You will not be visiting Australia regularly; your visit will be only during periods of leave.

Based on these facts, it is therefore considered that you have established a permanent place of abode in the Country X.

The 183 day test

This test does not apply to you as it has been identified that your permanent place of abode is in the country X.

The Commonwealth superannuation fund test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person.

You are not a contributing member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not be treated as a resident under this test

Your residency status

Overall, it is determined that you do not satisfy any of the residency tests. Therefore you are not considered to be an Australian resident for tax purposes for the term of your employment contract.