Edited version of private ruling

Authorisation Number: 1011711228591

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Ruling

Subject: Residency - working overseas

Question

Are you an Australian resident for taxation purposes?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 2011

Year ending 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

The scheme commences on:

1 July 2010

Relevant facts and circumstances

You are an Australian citizen.

You are employed as a locally engaged staff member of the Australian government organisation in country A. You arrived in country A in the 2010-11 income year.

You commenced your employment with the Australian government organisation in the 2010-11 income year on a contract for a number of years.

You are earning country A's currency which is being deposited into your country A's bank account.

You are currently renting an apartment in country A.

You have no intention of returning to Australia in the foreseeable future, except to visit family and friends.

You are single and you have no dependants.

In the previous financial year (2009-10), you were an employee of the Australian Government and during that time contributed to the PSS Superannuation Fund.

You resigned from the Australian Public Service prior to your departure for country A.

You do not own a property in Australia.

You have investments in Australia in the form of a term deposit, units in international exchange traded funds and units in an Australian index fund. You intend to transfer these investments to the country A in the future.

You are not eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or have a child or spouse that is eligible.  

Relevant legislative provisions

Section 995-1 of the Income Tax Assessment Act 1997

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

Reasons for decision

An Australian resident is defined in section 995-1 of the Income Tax Assessment Act 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 Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia. These tests are:

1. the resides test.

2. the domicile test.

3. the 183 day test.

4. 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.

1. The resides test

The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

As you are physically present in country A, you are not considered to be residing in Australia under this test.

2. The domicile test

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.

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, you are an Australian citizen, and there is no evidence of an intention to make your home indefinitely in country A. Therefore, you are considered to have maintained your Australian domicile.

However, you have established permanent residence in country A. You have an employment contract for a number of years in country A. You are currently renting an apartment in country A. You resigned from your Australian employment prior to departing for country A. You have indicated that you have no intention of returning to Australia in the foreseeable future, except to visit family and friends.

Based on these facts, it is therefore considered that you have established a permanent place of abode outside of Australia.

3. The 183-day test

This test does not apply to you as it has been identified that your permanent place of abode is outside of Australia.

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. 

You are not a contributing member of the PSS or the CSS, nor are you the spouse or child of such a person. Therefore, you are not treated as a resident under this test.

Your residency status

As you are not deemed to be a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be a resident of Australia for taxation purposes from the date of your departure from Australia.