Edited version of private ruling

Authorisation Number: 1011680971129

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Ruling

Subject: Residency

Question:

Will you be an Australian resident for income tax purposes?

Answer: No.

This ruling applies for the following period:

Year ending 30 June 2011

Year ending 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

The scheme commenced on:

1 July 2010.

Relevant facts

You are an Australian citizen and Australia is also your country of origin.

Since some time in the 2006-07 income year, you and your family have been living and working full time in Country A.

You are leasing accommodation in Country A.

Since 2009, you have been foreign residents for income tax purposes in Australia.

You are in receipt of a job offer from a foreign company based in Country B. You will be paid in Australian dollars. The offer is a minimum of two years and is open ended.

You state you intend to reside overseas permanently. You do not plan to return to Australia in the foreseeable future.

You will only return to Australia twice a year to visit family for a certain amount of weeks.

Your long term objective is to make a base in a couple of other countries in the world. This is to assist you to derive employment contracts with companies in these regions. You eventually wish to apply for residency in Country C.

Whilst working in Country B you will be residing in a rented apartment. You would direct your mail there and you would live there as your primary residence while commuting to work. You would have a Country B driver's licence and you would also fund your living expenses from your Country B bank account.

Prior to some time in the 2006-07 income year, you lived in your house in Australia. This house which is currently rented out will be sold and the funds invested in foreign equities. If you cannot sell, it will continue to be rented out.

In Australia, you would close all your saving accounts with the exception of your joint bank account with your spouse. This account is required to stay open in order to maintain the loan on your investment property. It would also be used to receive funds from your job which will be paid in Australian dollars.

You would retain all your existing Australian based investments for the long term.

The remainder of your personal possessions in Australia would either be sold and or relocated to Country B.

You state that your spouse and child will not accompany you to country B and would relocate to Australia. They would independently lease accommodation in Australia. The reason for this is that you could not obtain a suitable Country B visa and you also had personal concerns as well as concerns around the suitability of Country B schooling for your child.

You have no social or sporting club connections with Australia.

In Country B, you state that you will have acquired social networks through friends. You will also have made some specific memberships as well.

In Country B, you will be paying tax on your employment income you derive from working there. You will also be a Country B resident for income tax purposes.

You and 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 will be physically present overseas, you will not be considered to be residing in Australia according to ordinary concepts under this test.

The domicile test

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.

Domicile

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 2010-11 income year when you relocate to Country B, you will still maintain an association with Australia through your family and some investments. However, your association with Country B will be more significant as:

· You will be residing and working in Country B from some time in the 2010-11 income year.

· You will be residing there for at least a minimum of two years.

· You will have acquired a Country B driver's licence.

· You will fund your living expenses from a Country B bank account.

· You will have made social networks through friends. You will also have made some specific memberships as well.

Based on these facts, it is therefore considered that you will have established and maintained a permanent place of abode in Country B from some time in the 2010-11 income year.

The 183-day test

This test does not apply to you as it has been identified that your permanent place of abode will be 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 are 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 will not be 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 will not be considered to be an Australian resident from some time in the 2010-11 income year.