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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 periods:
Year ended 2009-10
Year ending 2010-11
Year ending 2011-12
The scheme commences on:
1 July 2009.
Relevant facts
Some time in the 2009-10 income year, you left Australia on a specific visa for a couple of years. Up until then, you were and always have been an Australian resident for income tax purposes.
You currently still remain employed by your Australian employer; however, you have taken leave without pay.
You own a house in Australia which was your principle place of residence until you left Australia.
Since leaving Australia, you have rented out your house in Australia.
You are boarding accommodation with a person overseas. You haven't taken out any leases.
You state that you intend on returning to Australia to live permanently.
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 have been residing overseas since some time in the 2009-10 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 be away from Australia from some time in the 2009-10 income year for a period of a couple of years. However, you will be considered to have maintained your Australian domicile as your associations with Australia will be considered to be more significant as:
· you are currently still employed with your Australian employer and have only taken leave without pay.
· you maintained and rented out your home in Australia which was your principle place of residence.
· you only left Australia on a specific visa and plan on returning to Australia to permanently reside.
Based on these facts, it is considered that you will not establish a permanent place of abode overseas. 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 be an Australian resident for income tax purposes for the period you spend overseas from some time in the 2009-10 income year.