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Edited version of private ruling
Authorisation Number: 1011760020823
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Ruling
Subject: Residency
Question
Are you an Australian resident for tax purposes?
No.
This ruling applies for the following periods
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2009
Relevant facts
You are a country A citizen and a resident of country A for income tax purposes.
In 20XX you were granted an Australian permanent residence visa.
You reside in country A for over 200 days of the year.
You believe you will reside in Australia for a maximum of about 100 days in each financial year.
You maintain a family home in country A.
Your children and parents live in overseas.
You conduct a legal and consulting business in country A and are the director of investment companies in country A.
You derive more than 90% of your income from country A sources.
You are the director of investment entities in Australia.
You own a unit in Australia which is your place of residence when you are in Australia.
The majority of your assets are located outside Australia.
Your spouse conducts a business in country A and is the director of a company in country A.
While in Australia your spouse does not engage in earning employment income.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1936 subsection 6(1)
Reasons for decision
Residency
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
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 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; 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'.
You and your spouse reside in country A as evidenced by:
· maintaining a family home there
· residing with your spouse
· the majority of your work is in country A and
· you only intend residing in Australia a maximum of 120 days per year.
Therefore, you are not 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 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. 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 have a family home in country A;
· you maintain an association with Australia through your director roles of two investment companies,
· you reside in country A with your spouse,
· you are working full time and
· you have family ties in country A.
Based on these facts, the Commissioner is satisfied that you have not established a permanent place of abode in Australia.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode is 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.
You will not be treated as a resident under this test as you are 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 considered to be a resident of Australia 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 from the date of your departure from Australia under subsection 995-1(1) of the ITAA 1997.