Edited version of private ruling

Authorisation Number: 1011693309791

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Ruling

Subject: Residency - Foreign Resident

Question:

Are you an Australian resident for income tax purposes?

Answer: No.

This ruling applies for the following periods:

Year ended 30 June 2010.

Year ending 30 June 2011.

The scheme commenced on:

1 July 2008

Relevant facts

You are a citizen of Country A and Country B.

You were born in Country B and you lived there for nearly 20 years before moving to Country A and becoming a Country A citizen.

You came to Australia some time in the 2008-09 income year.

In Australia, you have a permanent place to live - it's where your spouse lives. You state that you intend on moving to Country A because your family lives there.

You state that you left Australia for Country A some time in the 2009-10 income year to catch up with your chores and business. This mainly involved spending time and socialising with certain members of your family and friends. You also undertook your daily administrative tasks.

You returned to Australia some time in the 2010-11 income year.

You don't own any bank accounts in Australia. You own an investment property. The construction has now started and is expected to be ready by late in a subsequent year.

In Australia, you derive a certain amount of money every two weeks from a part time job which you undertake. Your work has always been periodic in nature. Your current contract will expire some time in the 2010-11 income year. You pay tax in Country A on this income.

In Country A, you have a permanent place to reside in your parent's house. You have your own room and personal belongings there. You also have some furniture at your relations' homes.

In Country A, your sibling has also offered you accommodation to stay when you plan to go back there some time in the 2010-11 income year.

After you sold your house in Country A, you put the money towards other investments in Country A.

In Country A, you own shares, a specific savings plan, a credit card and bank accounts. You pay tax in Country A from the income derived from these.

In Country A, you have two grown children. You also have three grandchildren. You did not bring them to Australia because of personal reasons.

In Australia, you do not have any social or sporting club connections.

In Country A, you are a member of various social and sporting clubs.

You and your spouse, are not and have never been Commonwealth Government of Australia employees.

You state that you intend to return to Country A to permanently reside once your spouse retires from work in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1)

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for 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 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'.

Taxation Ruling TR 98/17 considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

In your case, you generally only come to Australia periodically in order to visit your spouse. Whilst you are in Australia, you reside temporarily with your spouse and undertake part time employment. Accordingly, it is considered that you are not an Australian resident for taxation purposes under the resides test as your behaviour in Australia does not reflect a degree of continuity, routine or habit that is consistent with residing here.

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.

In your case, you are a citizen of Country A. Although you maintain an association with Australia through your periodic visits to your spouse and part time employment, your association with Country A is more significant as:

· You have stronger and more family ties there. Your mother, two children and three grandchildren reside there.

· You own shares, a specific savings plan, a credit card and bank accounts. You pay tax in Country A from the income derived from these.

· All your belongings and personal assets are there.

· You have numerous sporting and social club contacts.

· You pay tax in Country A on the part time employment income you derive from Australia.

· You intend on returning to Country A to permanently reside once your spouse retires from work in Australia.

Based on these facts, you are considered to have established a permanent place of abode outside of Australia. Therefore, you are not considered to be a resident of Australia for income tax purposes under the domicile test.

The 183-day test

Under the 183-day test, a person will be considered an Australian resident if they are present in Australia for 183 days during the year of income unless the Commissioner is satisfied that the persons usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

This test does not apply to you as it is considered that your permanent place of abode is outside Australia.

The superannuation test

Under the superannuation test, a person will be considered an Australian 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.

You and your spouse are not members of the PSS or the CSS. Therefore, you will not be treated as a resident under this test.

Your residency status

As you are not deemed to be a resident of Australia under any test of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be a resident of Australia for income tax purposes.