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Edited version of private ruling
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Ruling
Subject: Residency status
Question:
Are you a non-resident of Australia for tax purposes?
Answer: Yes
This ruling applies for the following period:
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commenced on:
1 July 2009
Relevant facts:
You have been working and living in Country X for a number or years.
You pay tax on your earnings to the taxing authorities in Country X.
You have a permanent position in Country X.
You have taken up permanent residence in Country X.
You have a lease on a 3 bedroom apartment in Country X. A new lease has been signed for another 2 years. You pay all costs yourself. The accommodation is not provided by your employer.
You do not intend to return to Australia in the near future. You must show that you have worked in Country X for a straight period of Y years. You have already completed a certain number of years of service in that country and intend to spend some more years there.
You hold a rental property and bank accounts in Australia.
You have taken all your personal belongings to Country X.
You will continue your employment and continue living in Country X until at least 30 June 2013.
You visited Australia for several days in the 2009-10 income year when you came for annual vacation and work purposes. You stayed with your relative.
You are not an employee of the Commonwealth Government of Australia.
Relevant legislative provisions:
Income Tax Assessment Act 1936 Subsection 6(1).
Income Tax Assessment Act 1997 Section 995-1.
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 a resident of Australia 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 tax purposes if they satisfy the conditions of one of the three other 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 number of years and it is your intention to reside there for some more years, it is considered that you are not a resident of Australia for taxation purposes under the resides 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.
In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able 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.
For the period 1 July 2009 to 30 June 2013, it is considered that you have not been and will not be an Australian resident for taxation purposes under the domicile test for the following reasons:
· You have been living and working in Country X for a number of years and intend to work there for more years. You must show that you have worked in Country X for a straight period of Y years.
· You have no intention to return to Australia in the near future.
· You pay tax on your earnings to the Country X taxing authorities.
· You have a permanent position in Country X.
· You have taken up permanent residence in Country X.
· You have a lease on a 3 bedroom apartment in Country X. A new lease has been signed for another 2 years. You pay all costs yourself. The accommodation is not provided by your employer.
· You have taken all your personal belongings to Country X.
· You hold a rental property in Australia.
· You visited Australia for several days in the 2009-10 income year when you came for annual vacation and work purposes. You stayed with your relative.
· You will continue your employment continue living in Country X until at least 30 June 2013.
Based on these facts, it is therefore considered that you have established a permanent place of abode in Country X.
The 183-day test
This test does not apply to you as it has been established that your usual place of abode from 1 July 2009 is in Country X.
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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.
This test does not apply to you as you are not an employee of the Commonwealth Government of Australia.
Your residency status from 1 July 2009 to 30 June 2013
From 1 July 2009 to 30 June 2013, as you are not deemed to be a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you are considered to be a non-resident of Australia for taxation purposes.