Edited version of private ruling

Authorisation Number: 1011697539153

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Subject: Residency and foreign employment income

Question

Are you a resident of Australia for income tax purposes?

Answer

Yes.

This ruling applies for the following period:

Income year ending 30 June 2011

The scheme commences on:

1 July 2010

The scheme that is the subject of the ruling:

You are an Australian citizen.

You commenced employment at an Australian Commonwealth Government Department in early 2010, working in Country X.

You became a member of the Public Sector Superannuation Scheme (PSS) from the commencement of your employment with that government department in early 2010.

In a telephone conversation in late 2010, you advised the ATO that you are employed at that government department as a locally engaged staff member in the role of a personal assistant.

You have stated that your intention is to work for that government department until at least early 2012.

You are renting an apartment in Country X and have advised that you do not own or rent any property in Australia.

As per the advice you received from the ATO, you lodged an income tax return for the 2009-10 income year as an Australian resident for taxation purposes.

Your employer did not withhold tax from your salary and wages in the 2009-10 income year.

As a result of a pre-issue audit, your 2009-10 income tax return was amended to include an amount of assessable foreign source income which represented your salary and wage earnings from that government department.

Your 2009-10 notice of assessment issued in September 2010.

The ATO issued you with an 'Introduction to PAYG income tax instalments' notice in November 2010.

Relevant legislative provisions

Subsection 6(1) of the Income Tax Assessment Act 1936

Subsection 6(1) of the Superannuation Act 1990

Superannuation Act 1976

Explanation: (This does not form part of the notice of private ruling)

Residency

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 reside 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 for tax purposes if they meet the conditions of one of the other three tests.

Where one or more of the above tests is satisfied, a taxpayer will be deemed to be an Australian resident for tax purposes.

You are currently working at an Australian Commonwealth Government Department in Country X. You are a member of a Commonwealth superannuation fund, the Public Sector Superannuation (PSS) scheme. You are deemed to be a member of the Commonwealth superannuation scheme as explained below.

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. 

A person is a 'resident' under this test if they are:

· a member of the superannuation scheme established by deed under the Superannuation Act 1990 (SA 1990), or

· an eligible employee for the purposes of the Superannuation Act 1976, or

· the spouse or a child under 16, of a person covered by either of the above.

The SA 1990 established the PSS, and the Superannuation Act 1976 established a scheme called the Commonwealth Superannuation Scheme (CSS).

To determine whether you are a resident under the Commonwealth superannuation fund test, for the period you are deriving income in Country X, it is necessary to determine whether you are a member of the superannuation scheme (PSS) for the purposes of the SA 1990 for that period.

A member of the superannuation scheme is defined in section 6(1) of the SA 1990 to mean a person who is a permanent employee.

It should be noted that a person may still be a 'member' even though they are not actually making contributions to the superannuation scheme established by deed under the Superannuation Act 1990 (PSS). This is because the term 'member' is not defined in terms of whether a person is contributing to the superannuation scheme (PSS) or not. Therefore, the act of contributing is not determinative in deciding a person's residency status.

In your case, you have advised that you are a member of the PSS. You have stated that you have requested your employer contribute to Super Fund Y, another superannuation fund of which you are a member, and not to your PSS fund. However, this does not affect your residency status under the superannuation test as you are still eligible to contribute to the PSS.

As you are a member of the PSS you will satisfy the Superannuation test. Therefore, you will be considered to be an Australian resident for tax purposes while working at that Australian government department in Country X.

Conclusion

You are considered to be an Australian resident for tax purposes under the superannuation test outlined in subsection 6(1) of the ITAA 1936.