Edited version of private ruling

Authorisation Number: 1011588709574

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: your residency status

Are you an Australian resident for tax purposes?

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2008

Relevant facts and circumstances

You were born in Australia.

You are an Australian citizen.

You moved to Country A to be with your de facto partner.

Your de facto partner is completing further education.

This appointment was offered to your de facto partner while you were in a de facto relationship in Australia.

You successfully applied for a visa working for a company in Country A.

The visa is a working visa that can be renewed indefinitely.

You have been a permanent employee of the company for over two years.

You have travelled back to Australia to renew your visa and then returned to Country A (new immigration laws in Country A prohibit people from renewing visas in Country A).

You stayed only long enough to complete the visa approval process.

You plan to continue to renew this visa and remain working for your current employer for the foreseeable future.

Your de facto partner has over two years until the completion of their further education, perhaps longer, depending on where the research takes them. During that time you will be living in Country A.

It is unlikely that you will return to Australia after your de facto partner finishes the further education as there are very few opportunities for the work your de facto partner will be qualified for in Australia.

Your de facto partner has dual citizenship in Country B.

Your de facto partner is more likely to find work in either Country A or Country B after the further education is completed.

You can continue your employment in Country B with your current employer should the need arise.

You have been renting in Country A because the recession has made securing a home loan in Country A difficult for non-nationals.

You have a long term rental agreement on an apartment which you have fully furnished and have purchased significant upgrades to improve it.

Prior to leaving Australia you were self-employed.

Upon leaving you gave up all of your business contacts and have not worked for any Australian companies since.

You sold all of your assets that you could not easily transport to Country A.

You have rented out your property in Australia and have no intention of living in it in the future. It is a negatively geared investment property.

You have a child who lives with their mother and step-father. Your child has always lived with their mother.

You pay child support.

You have never been the custodial parent.

You have kept a savings account with Bank A solely for the purposes of paying child support and the mortgage on the investment property.

You are paid by your employer in Country A into a bank account in Country A which is in your name.

Neither you or your de facto partner are or were employees of the Commonwealth Government of Australia.

Relevant legislative provisions

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

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

An Australian resident is defined in subsection 995-1(1) of the Income Tax Assessment Act 1936 (ITAA 1997) to be a person who is 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. These tests are:

· the resides test

· the domicile test

· the 183 day test

· the superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650.

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.

The resides test

The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

As you are maintaining a permanent place of abode in Country A where you reside with your de facto partner and work, you are not considered to be residing in Australia.

The domicile test

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 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 surrounding 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 lives does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.

In your case, you have advised that it is unlikely that you will return to Australia after your de facto partner finishes the further education. Further, you sold your car and all of your other assets that you could not easily transport to Country A. Therefore, you are not considered to have maintained your Australian domicile.

Further, your initial stay in Country A has been over two years. Although you maintain an association with Australia through your child (who lives with their mother and step-father) and your investment property, your associations with Country A are more significant as you will be residing there with your de facto partner and you work for a Country A company as a permanent employee.

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

The 183-day test

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

The superannuation test

This test does not apply to you as neither you nor your de facto partner are or were employees of the Commonwealth Government of Australia.

Your residency status

As you are not deemed to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident for tax purposes.

Note

As your rental property income has its source in Australia, this income will be subject to tax in Australia under section 6-5(3) of the ITAA 1997. Therefore, you will need to lodge an income tax return in Australia to declare this income.