Edited version of private ruling

Authorisation Number: 1011765417866

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Ruling

Subject: Residency

Question and answer:

Are you an Australian resident for tax purposes from the date you departed Australia?

No.

This ruling applies for the following period:

1 July 2008 to 30 June 2010.

The scheme commenced on:

1 July 2008.

Relevant facts:

You are an Australian citizen.

Your country of origin is Australia.

As a result of previous employment in Australia you have a superannuation account with the Public Sector Superannuation Accumulation Plan (PSSAP).

The PSSAP was established by the Superannuation Act 2005.

You have been living in another country for several years.

Before you went overseas you were residing in Australia with your parents.

You do not know if or when you will return permanently to Australia to live.

You are renting accommodation in the other country.

Your assets in the other country include a bank account and a superannuation account that your employer in the other country contributes to.

You have employment in the other country.

You have a social network of friends in the other country.

Your Australian assets include a bank account, shares, and your PSSAP account which you no longer contribute to.

You do not own any property in Australia.

You are single.

You are over 16 years of age.

You have maintained connections with your family and friends in Australia and returned to Australia on a couple of occasions for short periods to visit your family.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 995-1(1).

Income Tax Assessment Act 1936 subsection 6(1).

Reasons for decision

Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 and permanent place of abode test,

· the 183 day test, and

· the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered.

If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.

The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia specifies that a person's place of abode is where they live.

You left Australia to live and work in the other country and do not know when you will return to Australia. As you are living in the other country, this is where your place of abode is. Accordingly, you have not been a resident of Australia for taxation purposes under this test since you left to reside in the other country.

The domicile and permanent place of abode test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia.

A person's domicile is generally their country of birth. This is known as a person's domicile of origin. A person's domicile of origin will not usually change but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to acquire a domicile by choice outside of their domicile of origin, a person must have and be able to prove an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person becomes a citizen of a country outside of their domicile of origin.

IT 2650 specifies that a person with an Australian domicile who is living outside Australia will retain their Australian domicile if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency' - at the end of a specific period of time for example.

In your case, you are an Australian citizen and your domicile of origin is Australia.

Although you cannot say when you will return to Australia, we consider that you have retained your Australian domicile while you have been living and working in the other country because you have not become a citizen of the other country.

As a result, you will be a resident of Australia for taxation purposes under the domicile and permanent place of abode test unless the Commissioner is satisfied your permanent place of abode is outside Australia.

IT 2650 specifies that a permanent place of abode does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives.

IT 2650 also specifies that a period of two or more years is generally considered sufficient to support the establishment of a permanent place of abode outside of Australia and that an intention to return to live in Australia permanently does not prevent a taxpayer setting up a permanent place of abode elsewhere in the meantime.

In your case, we consider you have established a permanent place of abode in the other country because:

· You have been living and working in the other country for several years and do not know when you will return to Australia.

· You have established a home in the other country by renting accommodation.

· Your family, with whom you resided in Australia before going to the other country, did not accompany you overseas. Accordingly, it can be said you abandoned your home in Australia to live in the other country.

You have retained your Australian domicile since leaving Australia but have established a permanent place of abode in the other country. As a result, you have not been a resident of Australia for taxation purposes under this test since you left to live in the other country.

The 183-day test

Where a person is present in Australia for 183 days during an income year, the person will be a resident of Australia for taxation purposes unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

In your case, you have been living and working in the other country for several years. Based on this, and the fact that we consider you have established a permanent place of abode in the other country, you are not a resident of Australia for taxation purposes under this test from the time you left Australia.

The superannuation test

Under this test, an individual will be considered a resident of Australia for taxation purposes if:

1) they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990,

2) they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976, or

3) they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

In your case, you do not have a spouse, you are over the age of 16, and you are neither a member of the PSS or an eligible employee for the purposes of the CSS.

Instead, you are a member of the PSSAP which was established under the Superannuation Act 2005.

Membership of the PSSAP has no bearing on your residency status.

Accordingly, you are not a resident of Australia for taxation purposes under this test.

Conclusion - your residency status

You have not been a resident of Australia for taxation purposes since you left Australia to live in the other country.