Edited version of private ruling

Authorisation Number: 1011739602713

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Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commence on:

1 July 2009

Relevant facts and circumstances

You are a resident of Australia and received a job offer to work overseas indefinitely.

You started your contract with an overseas company in the income year.

Your employment contract is open-ended and you expect to continue working overseas indefinitely.

You and your spouse ended your relationship before you left for overseas and you began living apart around this time. You have a child under 16 years who now resides with your ex-spouse in Australia.

You have left Australia permanently and you have only returned for short visits to visit with your child, inspect your rental property, sit exams at university where you are studying externally and attend to paperwork for your impending divorce. The total amount of days for these visits do not exceed 183.

Three days during all these occasions were for work purposes with airfares paid by your employer.

When you do return to Australia you stay with friends or your parent.

Accommodation is provided at your work place overseas for you.

Your work roster is 28 days on and 14 days off, although the roster does changes at times.

You spend most of your days off with your fiancée in a nearby overseas location.

You no longer have a place of residence in Australia.

You have not sold your major possessions in Australia as you are still waiting for the divorce settlement.

Your child and your ex-spouse currently reside in the family home.

You have your Australian mail sent to a post office box and a friend collects this mail and forwards any important documents to you overseas.

You are rationalising your bank accounts and currently have a savings account with a credit card attached. You have kept these as they are recognised throughout the world.

You also have two lines of credit, one for your shares and one for the new rental property. These two are mortgaged over the family home.

You also have an overseas bank account.

You purchased a property in Australia in the income year. This property is currently rented.

You still own shares but these will be sold with the divorce settlement.

Your intention is to live permanently overseas.

You now spend the majority of your time when not at your work location in a nearby overseas location with your fiancée.

You are establishing a residence overseas in a nearby overseas location with your fiancée.

Your ex-spouse from whom you are separated, has never worked for the Commonwealth Government of Australia.

You worked full time in the defence force for a period of over 10 years in the past.

You were a member of a Commonwealth superannuation fund which was closed and transferred to an Industry fund which was closed.

You are now a member of another Industry fund.

All the above superannuation funds were supplied with your tax file number.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1(1)

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Residency Status

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 which will help us ascertain whether you are a resident of Australia for income tax purposes. These tests are:

· the resides test;

· the domicile test;

· the 183 day test; and

· the superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650.

The primary test for deciding your residency status is whether you reside in Australia according to the ordinary meaning of the word resides.  However, where you do not reside in Australia according to ordinary concepts, you may still be considered to be a resident of Australia for tax purposes if you satisfy 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. 3^rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having 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'.

As you have been residing overseas since leaving Australia permanently to commence your employment contract in the 2009-10 income year, you are not considered a resident of Australia for tax purposes under this test.

The domicile test

Under the domicile test, a person whose domicile is in Australia is deemed to be a resident of Australia for tax purposes, unless the Commissioner is satisfied that their permanent place of abode is outside Australia.

A person's domicile is in their country of origin unless they acquire a different domicile of choice or by operation of law. To obtain a different domicile of choice, a person must intend to make their home indefinitely in another country. A working holiday visa would not be sufficient evidence of an intention to acquire a new domicile of choice.

IT 2650 lists the following relevant factors to be taken into account in determining a person's permanent place of abode:

· the intended and actual length of the individual's stay in the overseas country;

· whether the individual intended to stay in the overseas country only temporarily and then move on to another country or to return to Australia at some definite point in time;

· whether a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household) has been established outside Australia;

· abandonment of residence or place of abode in Australia;

· duration and continuity of the individual's presence in overseas country; and

· durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments he or she is leaving permanently, family ties and so on.

The weight given to each factor varies with the circumstances of each individual taxpayer. Applying your circumstances to the above criteria:

You left Australia to commence your employment contract overseas in the income year and have returned to Australia for short visits to visit family and attend to personal business affairs.

Your employment contract was open-ended and you accepted the offer to work overseas for an indefinite period.

You have stated that you do not intend to return to Australia and that you intend to establish a residence overseas with your fiancée.

Your accommodation is provided at your work site.

Your child and your ex-spouse are living in the family home in Australia. You have separated from your spouse and there is a divorce settlement pending.

You have a rental property in Australia.

You have shares, bank accounts and other assets in Australia. You have not sold these as you are waiting for the outcome of the divorce settlement.

You have an overseas bank account.

You have stated that you no longer have a residence in Australia and your family home and other possessions are subject to your pending divorce settlement. In addition, you have advised that you have left Australia permanently and it is your intention to establish a permanent residence overseas with your fiancée.

Based on these facts, you have established a permanent place of abode outside Australia and you are not a resident of Australia under this test.

The 183-day test

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

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Commonwealth Superannuation Scheme (CSS) or Public Service Superannuation Scheme (PSS), or that person is the spouse or child under 16 of such a person.

In your case, you are not a member of the CSS or the PSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not treated as a resident under this test.

Your residency status

In your case, you are not considered to be a resident of Australia for tax purposes from the date you left Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936.