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Edited version of private ruling
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Ruling
Subject: Residency
Question
Are you a resident of Australia for tax purposes?
No.
This ruling applies for the following periods
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commenced on
1 July 2010
Relevant facts
Your employment is overseas.
Your employment contract is for a number of years with the potential for an extension.
You departed Australia in 2010.
No visa is currently required or available in country A. Your employer is working on obtaining work visas for it's employees.
You intend to reside in country A for the duration of your contract.
You do not intend to return to Australia. At the end of your contract you intend to reside wherever employment is available.
You will only return to Australia for short visits if occasions such as weddings or funerals arise.
You do not have a permanent place of abode in Australia.
You own some investment properties in Australia which you have never lived in.
You own managed shares and bank accounts in Australia.
You have superannuation funds in Australia which you are no longer a contributing member.
You are not married and do not have any children or family in Australia.
You have abandoned all social and sporting connections in Australia since 2009.
You live in on site accommodation in country A.
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 are currently residing in country A as evidence by:
· living in accommodation provided by your employer
· working full time and
· your intention is to work in country A until the end of your contract
You do not intend to return to Australia
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 advised that you are living in accommodation provided by your employer in country A,
· you maintain an association with Australia through your investments, and
· you have not applied for citizenship or residency in country A.
Therefore, you have maintained your Australian domicile.
You currently live on an employment site while you are employed and you intend to live there for the at least the duration of your contract.
You intention is to remain outside Australia after your current employment ended.
The Commissioner is satisfied that you have established a permanent place of abode in Australia.
You are not a resident of Australia under this test.
The 183-day test
This test does not apply to you as after your departure you will not be in Australia for over 183 days in any year.
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.