Edited version of private ruling

Authorisation Number: 1011784426718

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Ruling

Subject: Residency, leaving Australia.

Questions and answers:

Are you a resident of Australia for tax purposes from your departure until your current employment contract in ceases?

No.

This ruling applies for the following period:

Year ended 30 June 2011.

Year ended 30 June 2012.

Year ended 30 June 2013.

Year ended 30 June 2014 .

The scheme commenced on:

October 2010.

Relevant facts:

You are an Australian citizen.

You relocated to Country X.

You have an employment contract with a company.

Your contract can be renewed as long as an agreement exists between you and your employer.

You hold a work visa with an expiration date.

Your work visa will be renewed each year by your employer.

You may be required to relocate to a further country overseas at the end of your current employment contract.

You have no specific intention to return to Australia at this stage.

Your only intended visits to Australia will be to visit friends and family or for work purposes, these will be once or twice a year.

Your spouse and child have also relocated to Country X.

You have established a home in Country X which will be rented for the entire contract period.

You have sold, put your furniture in storage, or given it to family members.

Your house in Australia is vacant.

Your spouse is seeking employment in Country X.

Your child is being schooled in Country X.

Your everyday Australian bank accounts have been left open.

Neither you or your spouse have ever been employed by the Commonwealth Government.

Assumptions:

N/A

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5.

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

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

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, and

· the superannuation test.

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. 3^rd 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 are currently residing in Country X as evidence by:

· renting a apartment,

· residing with your spouse and child,

· working full time, and

· your intention is to work in Country X indefinitely.

Therefore, you are not residing in Australia.

The domicile test and permanent place of abode test

Domicile is the place that is considered to be your permanent home. It is usually something more than a place of residence. In your case you are a citizen of Australia, and have made no attempt to adopt a different domicile. Therefore your domicile is Australia.

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.

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 situation:

· you have advised that it is your intention to make your home indefinitely in Country X,

· you are residing in Country X with your spouse and child,

· you are working full time in Country X, and

· your spouse and child are intending to work and attend school respectively.

Based on these facts, the Commissioner is satisfied that you have established a permanent place of abode in Country X.

Although your domicile is in Australia, your current permanent place of abode is in Country X.

Accordingly you are not an Australian resident under this test.

The 183-day test

It has been identified that you were away from Australia for more than 183 days and you do not have current intentions to return to Australia. As such you are not a resident under this test.

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 are not 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 a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not an Australian resident for taxation purposes from the date of your departure from Australia under subsection 995-1(1) of the ITAA 1997.