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Edited version of private ruling
Authorisation Number: 1011640219826
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Ruling
Subject: Residency - Foreign Resident
Are you an Australian resident for income 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 are an Australian citizen and you were born in Australia.
You are single with no children.
Some time in the 2007-08 income year, you left Australia to work and reside in Country A. You returned to Australia some time in the 2008-09 income year.
Prior to leaving for Country A, in Australia, you were renting accommodation with your sibling.
Then some time later in the 2008-09 income year you left Australia to reside and work in Country B. You went there on a one year specific visa which you renewed for another year after the expiry of the initial one year.
You did not have any family accompany you to Country B.
Whilst in Country B, you did not own any assets in Australia except for a bank account that was deriving minimal interest income.
You returned to Australia some time in the 2009-10 income year.
In Country B, you were residing in an apartment that was provided by your employer. You were responsible for paying all bills and utilities.
You payed income tax in Country B on the employment income you derived in Country B.
Whilst in Country B, you did not have any social or sporting connections in Australia.
In Country B, you had social connections through friends and had enrolled for specific classes.
You are not, or were not a Commonwealth Government of Australia employee.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
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.
· 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. 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'.
You were residing in Country B as evidence by living in an apartment and working there since some time in the 2008-09 income year.
Therefore, you were 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 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,
· in Country B, you resided in an apartment, payed taxes, bills and utilities
· you only maintained an association with Australia through some family and a bank account
· you resided and worked in Country B since some time in the 2008-09 income year
· you created social ties in Country B with friends, as well as enrolling in specific classes.
Therefore, you were not considered to have maintained your Australian domicile.
Based on these facts, the Commissioner is satisfied that you had established a permanent place of abode in Country B.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode was in Country B.
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.
You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.
Your residency status
As you were not considered to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you were not considered to be an Australian resident under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) from the date of your departure from Australia some time in the 2008-09 income year.
Therefore, you were deemed a foreign resident for income tax purposes for the 2009-10 income year.
Note
During the period you were a foreign resident, any interest income and/or dividend income derived by you from sources in Australia would have been subject to foreign resident withholding tax.