Edited version of private ruling

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Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are an Australian citizen.

You were born in Australia.

You worked overseas for several months.

You were on a working visa.

Your spouse did not accompany you overseas.

You have assets in Australia.

Neither you nor your spouse are or have ever been Commonwealth government employees.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)
Income tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other 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'.

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.

In your case, you only went overseas to work for several months. You did not intend to live overseas on a long term basis and you intended to return to Australia after your work commitments ceased, you did not establish a permanent place to live overseas and you were on a working visa. You were still residing in Australia according to ordinary concepts.

You are a resident under this test.

The domicile test

If a person has 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 retained your Australian domicile as you did not apply for long term residency or citizenship overseas

· You did not establish a permanent place of abode overseas for the following reasons:

· You went overseas to work only for a period of several months

· Your family did not accompany you overseas

· You have a home in Australia where your spouse lived while you were overseas

· You rented an apartment while overseas

The Commissioner is not satisfied that you established a permanent place of abode outside Australia. Consequently, you satisfy the domicile test and are a resident of Australia for taxation purposes.

As you are a resident under both the resides and domicile tests there is no need to consider the other two tests.

Conclusion

You were a resident of Australia for income tax purposes.