Edited version of private ruling

Authorisation Number: 1011669579712

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Ruling

Subject: Residency

Are an Australian resident for taxation purposes?

Yes.

This ruling applies for the following period:

Year ending 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Your country of origin is Australia and you are an Australian citizen.

You departed Australia in the 2009-10 income year to take up a position on a boat which is based overseas.

The purpose of your time overseas is purely for employment.

Your accommodation consists of your quarter on the boat.

The ship's home port is Country X. The ports visited are at the owner's discretion. The duration of your stay in each port can be anywhere from a day to greater than few months.

Your intentions are to remain in this position for at least five years with possible extensions but you are not expecting to take up residency in another country permanently.

You lived with your parents in Australia prior to departure.

You have an overseas bank account which you are paid into.

You own investment properties in Australia.

You do not pay any tax on your income in another country.

You have minimal social connections with Australia, the only ties you have is with your parents.

You have no social or sporting connections with an overseas country.

You and your spouse are not a member of a Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our 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. 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 for tax purposes if they meet the conditions of one of the other three tests.

1. The resides test

The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

As you are not physically present in Australia, you are not considered to be residing in Australia under this test.

2. 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, you are an Australian citizen, and there is no evidence of an intention to make your home indefinitely in another country. Therefore, you are considered to have maintained your Australian domicile.

In addition, although you are living overseas, your associations with Australia are considered to be more significant for the following reasons:

· you own rental properties in Australia

· you do not own any assets overseas

· your accommodation overseas consists only of your quarter on the boat which is of a transitory or temporary nature

· you are not taking up residency in another country permanently

· you will be visiting different ports and staying there for a day or greater than two months during your employment overseas

· you have a bank account in Australia

· you have no social or sporting connections with an overseas country 

· you have social connections in Australia through your parents, and

· you do not pay tax on your income in another country.

Based on these facts, it is therefore considered that you have not established a permanent place of abode overseas. You are therefore considered to be a resident of Australia for tax purposes under the domicile test.

Your residency status

As you are deemed to be a resident of Australia under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936 there is no need to examine the remaining tests. Therefore, you are considered to be an Australian resident for income tax purposes for the period you are overseas.