Edited version of private ruling

Authorisation Number: 1011592572749

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Ruling

Subject: Residence

Questions and answers:

Are you a resident of Australia for tax purposes?

Yes

This ruling applies for the following period:

Year ending 30 June 2013

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

You are an Australian citizen

Your country of origin is Australia

You departed Australia recently. Prior to this you have work overseas for multiple years without a break

You work in an overseas location

When your work in the current overseas location finishes, you will move to a different overseas location.

You intend to remain overseas for as long as your work requires you to remain abroad.

You are currently on a business visa in your overseas location which needs to be regularly renewed by travelling to Australia or a neighbouring country.

When you were not in the overseas location you were home in Australia staying with family.

You have been working overseas since some time ago and only returned home periodically for family visits.

You have worked in various countries.

You have a permanent address overseas in an overseas which you use for business or personnel related trips, you are currently not in the location of this address.

Your asset overseas is a bank account.

You are the joint owner of an Australian house with your spouse.

You have a joint bank account with your spouse.

You have shareholding in joint names with your spouse.

You pay tax in your overseas location

Your family has not accompanied you overseas as your spouse remains in Australia. You spouse visits you overseas sometimes and has done so for the past 6 years.

Due to your work, you have no social or sporting connections with Australia or your overseas location.

Neither your or you spouse were Commonwealth Government of Australia employees.

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 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 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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

· whether the person is physically present in that country at some time during the year of income

· the history of the person's residence and movements

· if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits

· if the person is outside the country for part of the relevant income year, the purpose of the absences

· the family and business ties which the person has with the particular country, and

· whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.

Taxation Ruling IT 2650 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 have been physically present in your overseas location on an irregular basis. Your history of movements does not show that you spend considerable time in any one location. You have not remained in your current location for a continuous period of time as shown by your monthly absences. In your absences from your current overseas location you travel to your home in Australia. You maintain family ties to Australia as shown by your return trips home. You continue to maintain the place of abode you own with your spouse whilst you are away.

You have not expressed an intent to remain in a single overseas location for a considerable period of time. Your intention to return to Australia is demonstrated by your monthly returns home. Your assets and family reside in Australia therefore showing a durable association with Australia. Under the resides test, you are an Australian resident.

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.

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.

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."

A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller.

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:

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

· 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;

· 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;

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

· the duration and continuity of the taxpayer's presence in the overseas country; and

· 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 relation to the weight to be given to each of the above factors, paragraph 24 of IT 2650 states:

The weight to be given to each factor will vary with the individual circumstances of each particular case and no single factor will be decisive… however… greater weight should be given to factors (c), (e) and (f) than to the remaining factors, though these are still, of course, relevant.

In your case you have not expressed an intended length of stay in an overseas country but have rather expressed your intent to work outside of Australia in unspecified locations. Your intention to remain in any given overseas destination is determined by the requirements of your employment contract until such a time the contract is finished and you will move on to another country. Your family remains in Australia, you have not established a family household outside of Australia. Your durability of association is only evident with Australia as it is where your family and assets reside. Your permanent place of abode is Australia.

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 permanent of abode is outside of Australia and they have no intention of taking up residence here.

In your case you will be a resident of Australia for tax purposes, for this test, in the years that you are in Australia for more than 183 days in the income year as you do not have a permanent place of abode outside of Australia.

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.

In your case, neither you, nor your spouse, have ever been Commonwealth government employees and therefore you are not able to contribute to the abovementioned superannuation schemes.

Your residency status

As you meet the Resides and Domicile tests, you are a resident of Australia for tax purposes.

As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia and will therefore include the income you receive from employment from your overseas location.