Edited version of private ruling

Authorisation Number: 1011651388265

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: Residency status

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following period

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commenced on

1 July 2008

Relevant facts

You were born overseas.

You are both an Australian and overseas resident.

You are single with no dependants.

You departed Australia on to take up a volunteer role overseas.

You have an overseas work visa that allows you to live and work overseas.

The contract that you have with the volunteer organisation is such that you are required to make set commitments for a number of years. You have continued to work for the same organisation since you arrived a number years ago.

You are not remunerated for your services.

While overseas you live in rental accommodation.

The assets that you hold in Australia consist of bank accounts and investment funds.

You do not own any assets overseas.

You do not have any social or sporting ties overseas with the exception of your volunteer colleagues.

You have family and friends that live in Australia.

The only social or sporting connection that you have with Australia is that you are a member of your local church.

You have returned to Australia on a number of occasions to rest and spend time with family and friends.

Members of your family have visited you on occasions overseas.

You have never been a Commonwealth Government of Australia employee.

You have recently renewed your commitment to the organisation for a number of years.

You were more than 16 years of age as at 1 July 2008.

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 for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a 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 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'.

Taxation Ruling IT 2650 provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay.

The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states:

The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes.

Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of residence include:

· 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, that is, 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 your case you:

· have lived in the one country since you left Australia

· have had a long term commitment to volunteer work overseas and intend to remain for an extended period

· have overseas rental accommodation

· do not have any overseas assets

· have Australian bank accounts and investment funds

· do not have any overseas social or sporting ties with the exception of your volunteer colleagues, and

· are single with no dependants.

On balance you are not considered to be a resident of Australia according to ordinary concepts under 'the resides' test as your ties overseas are stronger than they are to 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 an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

In your case, as you are still a citizen of Australia it is considered your domicile is unchanged.

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.

You:

· are single with no dependants

· have worked as a volunteer overseas in the one country for an extended period of time

· have long term rental accommodation overseas

· have since moving overseas returned to Australia on a number of occasions for rest and to holiday with family and friends, and

· intend to remain overseas in the one country for an extended period.

On the balance and based on the above, the Commissioner is satisfied that you have a permanent place of abode outside of Australia and so considers that you are not a resident for taxation purposes under the domicile test.

The 183-day test

Where 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.

In your case you have been in Australia for less than three months for each of the financial years for which this ruling applies to. As this time period does not exceed 183 days, you were not present in Australia for a total period of more than half of the years of income. Therefore, you are not a resident of Australia under the 183-day test.

The Superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

This test is not applicable to your circumstances as you are not, or have you ever a Commonwealth Government employee and so, a member of a CSS or PSS. Further, you are single and are over 16 years of age. Accordingly, you are not a resident under this test.

Your residency status

As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes.