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Edited version of private ruling
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Ruling
Subject: Residency - Australian Resident
Question:
Will you be an Australian resident for income tax purposes?
Answer:
Yes.
This ruling applies for the following period:
Year ended 2011-12
The scheme commences on:
1 July 2010.
Relevant facts
You are an Australian citizen and Australia is your country of origin.
You are single with no dependants.
Some time late in the 2010-11 income year, you intend on departing Australia to live and work in Country A. You are going there on a specific visa.
You are unsure of when you will return to Australia. However, you will definitely be in Country A for one year as your work contract stipulates a period of one year and has a possibility of extension.
Once leaving Australia, you will only be returning once for about week to visit your parents.
In Australia, you have been renting accommodation.
In Country A, you will be residing in accommodation provided by your employer.
You will not have any family accompany you to Country A.
You currently have no financial ties in Australia.
You are not, or were not a Commonwealth Government of Australia employee.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
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 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 first two tests are examined in detail in Taxation Ruling IT 2650.
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 for tax purposes if they 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. 3rd 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 will be residing in Country A for a minimum of a year from some time late in the 2010-11 income year, you will not be considered to be residing in Australia.
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.
In your case, you will only be away from Australia for a minimum of one year from some time late in the 2010-11 income year. Therefore, you would be considered to have maintained your Australian domicile.
In addition, although you will live and work in Country A for a minimum period of one year, your associations with Australia will be considered to be more significant as:
· you are certain of only being away from Australia for one year.
· you have family in Australia.
· you will come to Australia for a week to visit your parents.
Based on these facts, it is considered that you will not establish a permanent place of abode in Country A. Therefore, you will be considered to be an Australian resident for income tax purposes under the domicile test.
Your residency status
As you will be deemed to be an Australian resident under the domicile test of residency outlined in subsection 6(1) of the ITAA 1936 there is no need to examine the remaining tests. Therefore, you will be considered to an Australian resident for income tax purposes for the one year period you spend in Country A.