Edited version of private ruling

Authorisation Number: 1011662482254

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Ruling

Subject: Residency status

Are you a resident of Australia for tax purposes?

No.

This ruling applies for the following periods:

Period ending 30 June 2011

Period ending 30 June 2012

Period ending 30 June 2013

Period ending 30 June 2014

The scheme commenced on:

1 July 2010

Relevant facts

You are a citizen of Country A and permanent resident of Country B.

You entered Australia with your spouse as a temporary resident.

You are about to be granted a further temporary visa.

You do not intend to live permanently in Australia.

You or your spouse do not have an employment contract in Australia.

You spend between more than half of your time in Country B. The remainder of your time you split between Australia, Country A and general travelling.

You have family in both Australia and outside Australia.

You own an apartment in Australia in which you live while you are in Australia.

You hold bank accounts in Australia on which you pay non resident withholding tax.

You own a home in Country A, which you do not rent out while absent from it.

You hold multiple assets in the Country A, including property, investments and cash in bank accounts.

You hold memberships in both Australian and overseas clubs.

You were over 16 years of age as at 1 July 2010.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

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 meaning of the word 'resident' is defined in subsection 6(1) of the ITAA 1936 as an individual who resides in Australia and includes a person:

· whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside of Australia

· who is actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia, or

· who is a member of a superannuation scheme established under the Superannuation Act 1990, an eligible employee for the purposes of the Superannuation Act 1976 or is the spouse or a child under 16 years of age of such a person.

The definition provided by subsection 6(1) of the ITAA 1936 thus provides four tests for determining whether an individual is a resident for tax purposes. These tests are:

· Residence according to ordinary concepts

· Domicile and permanent place of abode test

· The 183 day test, and

· Commonwealth superannuation fund test.

TR 98/17 provides our view that 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.

Residence according to ordinary concepts

As there is no definition of the word 'reside' in Australian income tax law, the ordinary meaning of the word needs to be ascertained from a dictionary. For example, the Shorter Oxford English Dictionary defines it as '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 ordinary meaning of the word 'reside' is therefore wide enough to encompass an individual who comes to Australia permanently, for example a migrant and an individual who is dwelling here for a considerable time. A migrant who comes to Australia intending to reside here permanently is a resident from arrival. However, when an individual arrives in Australia not intending to reside here permanently, all the facts about their presence must be considered in determining their residency status.

The period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

We consider the following factors when determining whether an individual's behaviour is consistent with Australian residency:

· intention or purpose of presence, for example a settled purpose, such as employment or education

· family and business/employment ties, for example the presence of an individual's family or the taking up of an employment contract

· maintenance and location of assets, for example purchasing a dwelling or motor vehicle or holding a bank account, and

· social and living arrangements, for example joining sporting or community organisations, enrolling children in school, redirecting mail to Australia or committing to a residential lease.

In your case you are a citizen of Country A and permanent resident of Country B. You do not intend to live permanently in Australia. You do not have an employment contract in Australia. You have family ties in both Australia and outside Australia. Although you own a home in Australia in which you live while you are here, you also own a home in Country A. Likewise, although you have bank accounts in Australia, on which you pay non resident withholding tax, you also have Country A bank accounts and other investments. You hold memberships in both Australian and overseas clubs. You spend the majority of your time in Country B and the remaining time is spent at your homes in either Country A or Australia, or in general travelling.

After considering all the facts about your presence in Australia, we do not consider you to be a resident of Australia under the residency according to ordinary concepts test.

Domicile and permanent place of abode test

Taxation Ruling IT 2650 details our view on the definition of domicile. In our view a person is considered to have the domicile of their country of birth, unless that person has acquired a domicile of choice in another country. This occurs when the person shows that their intention is to make their home indefinitely in that other country, for example through having obtained a migration visa. Therefore, in determining a person's domicile for the purposes of the definition of "resident" in subsection 6(1) of the ITAA 1936, it is necessary to consider the person's intention as to the country in which he or she is to make his or her home indefinitely.

In your case, you are a citizen of country A and a permanent resident of Country B. As you do not intend to live in Australia permanently, you are not considered to have acquired a new domicile of choice. As we have determined your domicile is outside of Australia we have no need to consider the whereabouts of your permanent place of abode.

The 183 day test

Where a person is present in Australia for 183 days or more 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 spend more than half of your time in Country B. As you spend over half of the year in Country B, less than 183 days in the year would be spent in Australia. Therefore, we do not consider you to be a resident 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.

In your case, you entered Australia temporarily and have not worked in Australia. Your spouse has not worked in Australia. As you have not worked for the Commonwealth Government you are not eligible to contribute to the PSS or CSS. Therefore, and because your spouse did not work for the Commonwealth Government and you are over 16 years of age, we do not consider that you are an Australian resident under the superannuation test.

Your residency status

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