Edited version of private ruling

Authorisation Number: 1011594366530

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Ruling

Subject: Residency for tax purposes

Were you a resident of Australia for taxation purposes from xxx until xxx?

No.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commenced on:

1 July 2006

Relevant facts and circumstances

You are a citizen of Australia.

You were born in Australia.

You went overseas to work.

You had a work visa.

You intended to live overseas permanently.

You were on a three year unlimited renewable contract.

All your expenses were met by your employer.

You only had a bank account overseas which your salary went into. This has now been closed due to your return to Australia.

You rented a property in Australia before your departure.

You did not have any active bank accounts after you moved overseas.

You do not pay tax in any other country.

No immediate family members accompanied you overseas.

You met and lived with your partner.

You had no social or sporting connections with Australia other than phone calls back to your family.

Before leaving Australia you were never a Commonwealth employee.

You returned to Australia for your annual leave.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 6(1).

Income Tax Assessment Act 1997 Section 6-5.

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'.

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.

In your case during the period of xxx and xxx you were living in xxx and intended to remain there permanently. As you were not living in Australia, you are not considered to be residing in Australia according to ordinary concepts during xxx and xxx.

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 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 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 established a permanent place of abode in xxx based on the following information:

· You did not intend to return to Australia.

· You were provided a place of accommodation by your employer

Based on these facts, it is considered that you established a permanent place of abode outside Australia. Consequently, you would not satisfy the domicile test.

183 day test

When a person is present in Australia for 183 days 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.

You were not in Australia for 183 days in any 12 month period during the period under consideration.

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.

This test is not applicable to you.

Your residency status

You were a non-resident of Australia for income tax purposes from xxx to xxx.

You are not required to declare your income derived in xxx during this period.