Edited version of private ruling

Authorisation Number: 1011643441066

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Ruling

Subject: Residency

Question

Are you an Australian resident for income tax purposes since you left Australia?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2009

Year ended 30 June 2010

Year ending 30 June 2011

Year ending 30 June 2012

The scheme commences on:

1 July 2008

Relevant facts and circumstances

You relocated to Country X to take up employment for an indefinite period.

You are working in Country X on a Working Resident Employment visa.

You spouse joined you in Country X.

You have adult children who live in Australia.

You do not own any property in Australia.

Your employer provided you with a house.

You return to Australia two to three times each year for two weeks each time to visit your family.

You do not intend to live in Australia while you are working in Country X.

You have established a home, provided by the employer, in Country X.

You are a member of a number of sporting and social clubs in Country X.

Neither you nor your spouse is a member of a Commonwealth Superannuation Scheme (CSS) or Public Service Superannuation Scheme (PSS).

Relevant legislative provisions

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

Income Tax Assessment Act 1936 subsection 6(1)

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 an Australian resident for income tax purposes. These tests are:

1. The resides test

2. The domicile test

3. The 183 day test

4. The superannuation 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 an Australian resident for income 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 dictionary meaning, 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.

As you have resided in Country X for a while, you are not considered to be residing in Australia under this test.

Neither the 183 day test nor the superannuation test applies to your circumstances.

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.

Taxation Ruling IT 2650 states that 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.

The leading case on whether a permanent place of abode is outside Australia is FC of T v Applegate (79 CTC 4307; (1979)). The Federal Court said that in the context of the definition of resident for taxation purposes, for a place of abode to be permanent it does not have to be everlasting or forever.

The following factors, listed at paragraph 23 of IT 2650, have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and regarding a taxpayer's permanent place of abode. They include:

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

(b) whether the taxpayer intended to stay in the overseas country only temporarily then move on to another country or return to Australia at some definite point of time;

(c) 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;

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

(e) the duration and continuity of the taxpayers presence in the overseas country; and

(f) the durability of association that the taxpayer has with a particular place in Australia for example, maintaining bank accounts, informing government departments such as Centrelink that he or she is leaving Australia permanently and that any benefits such as family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

IT 2650 states that 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. Applegate's case seems to indicate, however, that greater weight should be given to factors (c), (e) and (f)

In your case, you relocated to Country X to live and work there indefinitely. Your spouse lives with you, and your adult children, who are independent, continue to live in Australia. You do not own any property in Australia, and have established a residence in Country X in a house provided by employer. You are a member of a number of sporting and social clubs in Country X. You only return to Australia two to three times each year for two weeks each time to visit your family.

Based on these facts, it is considered that you have established a permanent place of abode outside of Australia. Therefore, you are not considered an Australian resident for taxation purposes under the domicile test since you left Australia.