| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011705834138
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.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Residency - working overseas
Question
Are you a resident of Australia for income tax purposes whilst working overseas?
Answer
No.
This ruling applies for the following periods
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 2011.
Relevant facts
You are a citizen of Australia.
You have been offered an open-ended contract of employment to work in Country A.
You will resign from your current job.
You intend to move to Country A for work purposes for a number of years and/or reaching the retirement age of 65.
You will rent a property while in Country A.
Your spouse intends to move with you to Country A for the duration of the contract after you have settled in.
Your children will not be coming with you to Country A.
You intend to return to Australia to visit your children during your time employed in Country A.
You are unsure about whether you will return to Australia at the end of your employment contract in Country A.
In Country A, you will purchase furniture, a vehicle, and you intend to set up a bank account.
Your assets in Australia, whist working in Country A, consist of your property and a bank account.
Your household furniture/possessions will not be taken with you to Country A.
You intend to rent out your house in Australia fully furnished.
You are a Commonwealth Government of Australia employee but you are not a member of the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS).
You state that you will not contribute to your superannuation fund while working in Country A.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1.
Income Tax Assessment Act 1936 Subsection 6(1).
Reasons for decision
An Australian resident is defined in subsection 995-1 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 paragraph 6(1)(a) 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, since your employment ties will be in Country A where you have an open-ended work contract, you will not be dwelling permanently or have a settled place of abode in Australia during the period you are working in Country A. Therefore, you will not be considered as residing in Australia during that time.
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 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. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere.
In your case, your intention is to stay in Country A for a number of years and/or reaching the retirement age of 65. Although you maintain an association with Australia through your family and your rental property, your associations with Country A are more significant since:
· you have obtained an open-ended employment contract to work full time
· your spouse will accompany you to Country A
· you will lease a home
· you will have purchased household goods
· you will have purchased a vehicle
· you will have set up a bank account.
Based on these facts, it is therefore considered that you will have established a permanent place of abode in Country A. Therefore, you are not considered to be a resident of Australia for tax purposes under the domicile test.
3. The 183-day test
Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's 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 has been identified that your permanent place of abode will be in Country A.
4. The superannuation test
An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the 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 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 will not be considered to be an Australian resident from the date of your departure from Australia.