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Edited version of private ruling
Authorisation Number: 1011693974727
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Ruling
Subject: Residency - Foreign Resident
Question:
Are you an Australian resident for income tax purposes from some time in the 2008-09 income year to some time in the 2009-10 income year?
Answer: No.
This ruling applies for the following period:
Year ended 30 June 2010.
The scheme commenced on:
1 July 2009.
Relevant facts:
You were employed by Company A to work in Country A from some time in the 2008-09 income year to some time in the 2009-10 income year.
You were present in Country A from some time in the 2008-09 income year. Your family joined you later in the 2009-10 income year. You and your family returned to Australia some time late in the 2009-10 income year.
When departing Australia, you and your family disposed of some particular personal assets, leased your family home, and put your remaining personal assets into storage. You also gave away the family dog.
You were of the view that your service in Country A would be ongoing with no fixed term or return date to Australia. You expected to be issued with a work visa which would have enabled you to stay in Country A for at least two years.
You did however intend to return to Australia to live once the employment agreement had been terminated.
Upon arrival in Country A, your child was enrolled and attended a school there.
The registration of your employer's company did not take place as expected and as a consequence you were unable to obtain a work visa.
You were made redundant some time in the 2009-10 income year as the company lost a major contract in Country A. The contract was unilaterally terminated by the Country A government.
You and your family were required to depart Country A. Therefore, returned to Australia some time in the 2009-10 income year.
At the time you were present in Country A - you were you using a specific visa rather than a permanent work visa. You were not able to apply for a permanent work visa as Company A was not successful in gaining the appropriate registrations in Country A.
During your period of employment in Country A, you were provided with monthly payslips. You were paid by your employer in Australian dollars into an Australian bank account. You were unable to open up a bank account in Country A due to not obtaining the appropriate visa.
You and your spouse are not, or were not 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. 3rd 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 were physically present in Country A from some time in the 2008-09 income year to some time in the 2009-10 income year, you were not 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 2008-09 income year to some time in the 2009-10 income year when you relocated to Country A, you still maintained an association with Australia through your bank account and some assets. However, your association with Country A was more significant as:
· You were working there from some time in the 2008-09 income year to some time in the 2009-10 income year.
· You were residing with your family there from some time in the 2009-10 income year to some time later in the 2009-10 income year.
· Your child was enrolled and attended school there.
Based on these facts, it is therefore considered that you have established and maintained a permanent place of abode in Country A from some time in the 2008-09 income year to some time in the 2009-10 income year.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode was in Country A.
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 were 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 are not 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 are not considered to be an Australian resident from some time in the 2008-09 income year to some time in the 2009-10 income year.