Edited version of private ruling

Authorisation Number: 1011713142927

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Ruling

Subject: Residency status

Question

Were you a non-resident of Australia for tax purposes?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2005

Year ended 30 June 2006

Year ended 30 June 2007

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commences on:

1 July 2004

Relevant facts and circumstances

You are an Australian citizen.

You permanently relocated to country X. It was your intention to work and live in country X indefinitely. You sold all your assets in Australia.

The only assets you retained in Australia were a few bank accounts.

You set up a permanent home in country X.

Your spouse accompanied you to country X. When living in country X you and your spouse had a child.

You were employed in country X. You also started various enterprises.

You made short visits to Australia. Yours visits were infrequent.

You returned to Australia on a permanent basis with your family.

Neither you nor your spouse was a member of a Commonwealth Government superannuation scheme

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Section 995-1.

Reasons for Decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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:

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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The ordinary meaning of the word reside, according to the dictionary meaning, 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.

As you resided country X for several years and it was your intention to reside there indefinitely, it is considered that you were not a resident of Australia for taxation purposes under the resides test.

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 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.

For the relevant period, it is considered that you were not an Australian resident for taxation purposes under the domicile test for the following reasons:

· You lived and worked in country X for several years and it was your intention to live there indefinitely

· You lived with your family in country X

· You sold all your assets in Australia; your only assets in Australia were a few bank accounts.

· You had a permanent home in country X

· You took all your personal belongings to country X

· You visited Australia for short stays on an infrequent basis.

Based on these facts, it is therefore considered that you established a permanent place of abode in country X.

The 183-day test

This test does not apply to you as it has been established that your usual place of abode for the relevant period was in country X.

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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

This test does not apply to you as, neither you nor your spouse was an employee of the Commonwealth Government of Australia.

Your residency status

For the relevant period, as you were not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you were a non-resident of Australia for taxation purposes for that period.