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Edited version of private ruling
Authorisation Number: 1011703435628
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 fact sheet has more information.
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Ruling
Subject: Residency - working overseas
Question 1
Are you a resident of Australia for income tax purposes for the year ended 30 June 2005, 2006 and 2007?
Answer
Decline to rule - the application is made more than two years after the issue of the relevant assessment for the year to which the scheme relates.
Question 2
Are you a resident of Australia for income tax purposes for the year ended 30 June 2008, 2009, 2010, 2011 and 2012?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2008.
Year ended 30 June 2009.
Year ended 30 June 2010.
Year ending 30 June 2011.
Year ending 30 June 2012.
The scheme commences on:
1 July 2007.
Relevant facts
You are a citizen of Australia.
Your country of origin is Australia.
You hold a Work Permit Employment Pass in the foreign country.
You have an employment contract from January 2005 to December 2012.
Your spouse and children joined you in the foreign country in October 2008.
You intend to remain overseas permanently with no date of return to Australia.
You have a permanent place to live in the foreign country.
You have overseas assets consisting of a bank account, share holding and a motor vehicle.
You return to Australia for a short period of time for business related purposes.
Your assets in Australia include property, bank accounts.
You do not have a permanent place to live in Australia.
Your property in Australia has been rented out and you stay in hotels on your return to Australia.
You do not have any social or sporting connections in Australia.
You are a member of a club in the foreign country.
You and your spouse are not Commonwealth Government of Australia Employees and have not held a position with the Commonwealth Government of Australia.
Relevant legislative provisions
Taxation Administration Act 1953 Subsection Sch1-359-35(2)(a).
Taxation Administration Act 1953 Section Sch1-359-35.
Income Tax Assessment Act 1997 Subsection 995-1(1).
Income Tax Assessment Act 1936 Subsection 6(1).
Reasons for decision
Question 1
Section 359-35 of Schedule 1 to the Taxation Administration Act 1953 (TAA) lists the circumstances in which the Commissioner may decline to make a private ruling.
Paragraph 359-35(2)(a) of Schedule 1 to the Taxation Administration Act 1953 (TAA) provides that a ruling does not have to be given where making the ruling would prejudice or unduly restrict the administration of a taxation law. This includes where the private ruling would not have any practical consequences because it relates to a transaction that occurred some years ago and your amendment period has already expired.
You requested a private ruling to cover the 2004-05, 2005-06 and 2006-07 income years. As your amendment period has already expired, a private ruling will not be provided for those years.
Accordingly, your application for a private ruling under Division 359 of Schedule 1 to the TAA for the year ended 30 June 2005, 2006 and 2007 has been declined.
Question 2
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.
1. 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'.
In your case, you have been working and living in the foreign country. You only return to Australia for short trips for work purposes and to see your family. Since you will be physically present overseas, you will not be considered to be residing in Australia according to ordinary concepts under this test.
2. 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 and 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, you will still maintain an association with Australia through your business ties and your property. However, your association with the foreign country will be more significant:
· You have been residing in the foreign country since 2005.
· Your family is living with you in the foreign country since 2008.
· You have no intention to come back to Australia in near future.
· You have a permanent place to live in the foreign country.
· You have an employment contract in the foreign country until 31 December 2012.
· You have assets in the foreign country consisting of a bank account, share holding and a motor vehicle.
· You have made social networks through your membership at a Club.
Based on these facts, it is therefore considered that you have established and maintained a permanent place of abode in the foreign country. Therefore, you are deemed to be a non resident under the domicile test.
Your residency status
As you will not be deemed to be an Australian resident for income tax purposes under domicile test of residency outlined in subsection 6(1) of the ITAA 1936, you will not be considered to be an Australian resident for the 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12 income years.