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Edited version of private ruling
Authorisation Number: 1011700290263
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.
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Ruling
Subject: Residency - Foreign Resident
Question:
Will you be 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
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on:
1 July 2008.
Relevant facts
You moved to Country A with your spouse some time in the 2008-09 income year.
You had established a private company through which you contract work in Country A. You have worked since your arrival in Country A. There is no end date to your work contract, it will continue indefinitely.
You opened a company bank account and personal bank account in Country A.
You have an Australian bank account which remains open, however, no income is generated and no money is being deposited into it.
You still have some Australian shares and investments that you intend to hold onto as a long term investment. You also have decided to hold onto your Australian property as a long term investment.
You sold your car in Australia prior to your departure.
In Country A, you reside in rented accommodation. Some time in the 2009-10 income year, you entered into a one year lease for this accommodation. You have two more one year options to extend the lease of which you intend to take up.
In Country A, you have purchased furniture and personal effects to furnish your accommodation.
Upon departure from Australia, you suspended your private health insurance and have not used your Medicare benefits.
You also notified the Electoral Office of your departure from Australia.
Both you and your spouse have strong social ties to Country A. You are both members of various social clubs and your spouse volunteers for a specific organisation.
You have no immediate plans to return to Australia, you have returned only to visit family and friends for two short trips.
You and your spouse are not, and 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. 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 will be physically present in Country A, 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 2008-09 income year when you relocated to Country A with your spouse, you still maintained an association with Australia through some family, friends and investments. However, your association with Country A is more significant as:
You have been residing with your spouse and working in Country A since some time in the 2008-09 income year.
Both you and your spouse have strong social ties to Country A, you are both members of various social clubs and your wife volunteers for a specific organisation.
You have purchased furniture and personal assets to furnish your accommodation.
You will be residing there indefinitely.
Based on these facts, it is therefore considered that you will have established and maintained a permanent place of abode in Country A since some time in the 2008-09 income year.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode is 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 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 2008-09 income year.