Edited version of private ruling

Authorisation Number: 1011716580150

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Ruling

Subject: Residency status

Question:

Were you a resident of Australia for tax purposes?

Answer: No.

This ruling applies for the following periods:

Year ended 30 June 2009

The scheme commences on:

1 July 2008

Relevant facts and circumstances

You were born in Country Y.

You hold both Australian and country X citizenship/passports.

You moved to country X with your spouse and children on date M in order to work on a 2 year employment contract. You had no intention to return to Australia in the foreseeable future.

Your children went to school in country X and you bought a family home there.

You were a member of a sporting club in country X.

Due to the global financial crisis, your contract was reduced to one year covering the period from date M to date N.

You were not able to find any other suitable work to remain in country X and returned to Australia with your family the day after date N.

Whilst in country X, you had investment properties and bank accounts in Australia. You also had credit cards that remained valid and ongoing.

Whilst living in Australia, you did not own a home. You rented a home.

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 many months 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 period date M to date N, it is considered that you were not an Australian resident for taxation purposes under the domicile test for the following reasons:

· You moved to country X with your spouse and children on date M in order to work on a 2 year employment contract

· You had no intention to return to Australia in the foreseeable future

· You bought a family home in country X

· Your children went to school in country X

· You were a member of a sporting club in country X

· You lived in rented accommodation when in Australia.

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 from date M to date N 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 from date M to date N

For the period date M to date N, you were not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936. You were therefore a non-resident of Australia for taxation purposes for that period.