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Edited version of private ruling
Authorisation Number: 1011713103013
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Ruling
Subject: Residency - Working overseas
Question
Are you a resident of Australia for income tax purposes whilst working overseas in Country A?
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.
The scheme commenced on
1 July 2009.
Relevant facts
You are a citizen of Australia and Country A.
Your country of origin is Australia.
You departed Australia a number of years ago.
You intend to make your home indefinitely in Country A.
You currently have a resident visa but are applying for a permanency visa.
You have an employment contract for a number of years to work in Country A. The contract can be extended as per your request.
As part of your employment contract, your company has provided you with accommodation in Country A.
Your assets in Country A consist of a bank account and a vehicle.
Your partner resides in Country A.
You have established social ties in Country A.
Upon your return to Australia, you stay with family. You do not have a permanent address in Australia.
Your assets in Australia consist of a property, motor vehicles, and a bank account.
You have friends and family in Australia.
You pay income tax in Country A.
You are not a contributor to a Commonwealth Superannuation Fund.
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 are in Country A where you have an extendable 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, under the resides test, you will not be considered as residing in Australia for the period you will be overseas.
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, you advised that you intend to make your home indefinitely in Country A. You are in the process of applying for a permanency visa. Therefore, you are considered to have acquired a new domicile of choice, and to not have maintained your Australian domicile.
You will maintain some association with Australia through your family and friends, you will still retain your property and vehicles whilst overseas, and you have an Australian bank account. However, your associations with Country A are more significant since:
· You have an employment contract to work for a number of years, which can be extended as per your request
· You have lived and worked in Country A for a number of years
· Your partner resides in Country A
· You have opened a bank account
· You own a vehicle
· You have established social ties in Country A
Based on these facts, it is considered that you will establish a permanent place of abode in Country A. Therefore, you are considered to be a non-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 you will not be present in Australia for 183 days during each year of income.
4. 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
You will not be deemed to be an Australian resident for income tax purposes under the tests of residency outlined in subsection 6(1) of the ITAA 1936.