Edited version of private ruling

Authorisation Number: 1011665753489

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Ruling

Subject: Residency

Are you an Australian resident for income tax purposes?

No.

This ruling applies for the following period:

Year ended 30 June 2009

Year ended 30 June 2010

Year ending 30 June 2011

The scheme commenced on:

1 July 2008.

Relevant facts

You are an Australian and Country A citizen.

Prior to some time in the 2008-09 income year, you worked for Company A in Australia. You also lived with your family in your home in Australia. During this period, you were an Australian resident for income tax purposes.

Some time in the 2008-09 income year, you were offered a job by Company A to work for its joint venture based in Country B.

You agreed to the job offer and entered into an employment agreement later in the 2008-09 income year.

The term of the employment under the agreement is indefinite but certain benefits require a minimum certain number of years of employment.

Your intention is to remain in this job for at least a few years and reside permanently in Country B during that time.

You relocated to Country B some time in the 2008-09 income year. Your spouse and two children were to join you after the end of the school year in Australia.

You state that the world economic crisis which was beginning to gather momentum at the time cast some doubt on Company A's start up business and whether or not they would continue to pursue business in that region.

You also state that given the severity of the economic impact of the crisis on Country B and the uncertainty that came with it, you and your spouse decided to delay her move and stay behind in Australia with your children while the situation becomes clearer to avoid unnecessarily disrupting the children's life.

You continued to live and work in Country B. You have been renting an apartment since some time in the 2008-09 income year.

In Country B you are a member of a health club. You are also a member of a certain community.

Since moving to Country B, your entire employment income was, and still is derived and paid in Country B. Your salary is paid into Country B accounts.

You stated that your spouse and children will finally join you to live in Country B later in this year after the end of the school year in Australia. At that time, you will either lease out or sell your house in Australia.

You state that your intention was, and continues to be to work for Company A entities firstly in Country B and later possibly in other countries where Company A operates.

You have no immediate plan of returning to Australia unless your job situation changes.

During the past two years, you have had to travel to Australia to visit your family while your spouse and children have joined you in Country B during many of the school holidays.

You do not have any sporting connections with Australia. Your only social connections revolve around your spouse's family and your friends.

You or your spouse are not, or have never been commonwealth government of Australia employees.

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 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 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 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. 3^rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'.

For the period that you were physically present in Country B, you were not considered to be residing in Australia according to ordinary concepts under this test.

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.

Domicile

Generally, 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. 

In your case, from some time in the 2008-09 income year when you relocated to Country B, you still maintained an association with Australia through your spouse and children. However, your association with Country B was more significant as:

· You were residing and working in Country B since some time in the 2008-09 income year.

· You are a member of a particular club and a particular community in Country B.

· You intend on remaining there for several years.

· Your employment contract is for a minimum of two years.

Based on these facts, it is therefore considered that you have established and maintained a permanent place of abode in Country B since some time in the 2008-09 income year.

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. 

In your case, you were 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 are not deemed to be an Australian resident for income tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident since you left Australia some time in the 2008-09 income year.