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Edited version of private ruling
Authorisation Number: 1011720211993
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Ruling
Subject: Residency - Foreign Resident
Question:
Are you an Australian resident for income tax purposes?
Answer: No.
This ruling applies for the following period:
Year ending 30 June 2011.
The scheme commenced on:
1 July 2007.
Relevant facts
You are an Australian citizen and your country of origin is also Australia.
Some time in the 2007-08 income year, you left Australia to start work and reside in Country A.
You have a specific visa which allows you to work and live in Country A. This is usually renewed every year.
Your work for Company A, in Country A, is undertaken in a specific part of that country.
You have an employment contract with Company A - this is usually signed every year. You state that you will be in Country A for as long as there is work and the company is located at the same location for years to come.
You don't plan on visiting Australia much unless you need too.
Since some time in the 2008-09 income year, you returned to Australia a few times only for a few weeks. You only went there to see your accountant and bank on different matters.
Your assets in Country A include a property which is currently under construction.
In Country A, you have a car and motorbike drivers licence. You also have a Country A tax file number.
In Australia, you have two investment properties that derive monthly rental income. You also own a third of another property - a family member resides in this.
In Australia, you have some shares in the stock market. You also have some bank accounts which are used for investment purposes and to deposit your pay into.
In Country A, you pay tax on the income you derive from working there.
None of your family accompanied you to Country A, your parents are in their 70's and don't like travelling. You reside with your spouse in Country A who you have been with for a year.
You have no sporting club associations in Australia or Country A.
You and your spouse have never been Commonwealth Government of Australia employees.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
An Australian resident is defined in subsection 995-1(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 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:
· 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.
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'.
For the period that you were physically present in Country A from some time in the 2007-08 income year, you were not considered to be residing in Australia according to ordinary concepts under this test.
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.
In your case, from some time in the 2007-08 income year, when you relocated to Country A, you still maintained an association with Australia through some investments. However, your association with Country A was more significant as:
· you have been working and residing there since some time in the 2007-08 income year.
· you have been residing there with your spouse.
· you have been paying tax on the income you are deriving from working there.
· you own a property which is currently under construction.
· you have a car and motorbike driver's licence.
· you have a tax file number there.
Based on these facts, it is therefore considered that you will have established and maintained a permanent place of abode in Country A.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode will be in Country A.
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 were 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 are not considered to be an Australian resident since you left Australia some time in the 2007-08 income year.