Edited version of private ruling

Authorisation Number: 1011686794419

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Ruling

Subject: Residency

Question

Were you a resident of Australia for taxation purposes while you were living in country A during 2010 income year?

Answer: Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are a citizen of Australia and country A.

You left Australia in June 2009 to travel and then obtain work to enable you to keep travelling.

The purpose of your trip is to travel around Europe.

You have been employed in late 2010 income year in country A.

You have an open ended contract with your employer.

You do not intend to reside permanently in country A.

You returned to Australia with in six months from you departure for three weeks to visit your family and again returned to country A.

You do not have a permanent place to live in country A. Currently you are sharing a house with three others in country A.

You do not have any other assets except a bank account in country A.

You do not have any social and sporting connection with country A.

You lived with your parents in Australia and will return to parents home upon return.

You do not own any premises in Australia.

You have a bank account and Australian shares from which you received dividend income.

You have a Superannuation account in Australia.

You pay tax on your income in country A

You and your spouse are not a Commonwealth Government of Australia Employee.

Australia has a tax treaty with country A.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Section 995-1(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 first two tests are examined in detail in Taxation Ruling IT 2650.

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.

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; having 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'.

As you were not physically present in Australia during 2010 income years, you are not considered to be residing in Australia.

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.

Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law.

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.

In your case, you are an Australian citizen. The purpose of your trip was to travel around Europe and obtain work to enable you to keep travelling. You were living in a share accommodation in country A. There is no evidence of an intention to make your home indefinitely in country A. Accordingly, you are considered to have maintained your Australian domicile.

Although you worked in country A for two months of 2010 income year, your association with Australia through your assets and family in Australia is more significant for the following reasons:

· you returned home with in six months from your departure in June 2009

· your family and friends live in Australia

· you have a permanent place to live in Australia when residing in Australia

· you have bank accounts and economic ties with Australia.

Based on these facts, it has been determined that you have not established a permanent place of abode in country A. Therefore, you are deemed to be a resident under the domicile test.

Your resident status

As you are deemed to be an Australian resident under domicile test of residency outlined in subsection 6(1) of the ITAA 1936, you are considered to be an Australian resident while you were living in country A in the 2010 income year.