Edited version of private ruling

Authorisation Number: 1011784432601

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Residency - Leaving Australia.

Question and answer:

Are you a resident of Australia for tax purposes for the 2009-2010 income year?

No.

This ruling applies for the following period:

Year ended 30 June 2010.

The scheme commenced on:

During the 2010 year.

Relevant facts:

You are a citizen of Country A by birth.

You moved to Australia.

You were naturalised and became an Australian citizen.

You lived in Australia until you moved to Country A.

You returned to Australia during 2010.

Your intentions were to stay in Australia permanently, with only a short trip to the Country A to collect your partner.

You intended to work for a few months whilst waiting for your partner to join you in Australia.

You stayed with friends for a month in Australia.

You then stayed for x months in another part of Australia whilst looking for work.

You found a job and saved money in preparations for a more permanent place to live, however it was at this time you decided to return to Country A.

After x months it became clear your partner was not going to be able to join you.

You decided you would return to Country A.

You intend to return to Australia as soon as your partner is able to return with you.

Your current aim is to return to Australia by the end of 2011 when you hope your partner will be able to travel and the visa application process will be complete.

During your x months in Australia you worked and earned Australian sourced income.

You have two bank accounts in Australia and a superfund.

You own a rental property in Country B. You have bank accounts in the Country A.

You remain in regular contact with friends in Australia.

You remain in regular contact with friends and family in the Country A.

You are currently unemployed, but are seeking to establish a small self-employed business which you plan to wind down before leaving the Country A for Australia.

You are currently not earning enough income to pay tax in any overseas country.

You have a permanent place in live in Country A.

You have never been a member of PSS or CSS superannuation funds.

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 will 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 stayed with friends for one month and then stayed in temporary accommodation while seeking work and eventually working. You did not establish a permanent abode. Your intention to work and establish a permanent abode in Australia did not eventuate. Therefore, you have not been residing in Australia.

The domicile test and permanent place of abode 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.

A persons domicile is established at birth when they acquire a domicile of origin, being the country of their fathers permanent home. The domicile of origin is retained until such time as a domicile is established by choice or by operation of law in another country.

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. A domicile may be changed by operation of law for example where a person has obtained a migration visa.

In your case you have obtained an Australian domicile as per your Australian citizenship.

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. The commissioner considers 2 years as a rule of thumb to establish a permanent place of abode.

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 current intention to make your home in Australia permanently,

· you maintain an association with Australia through your friends and investments,

· you have an Australian superfund and bank accounts,

· you did not have a permanent place to live in Australia,

· you worked in Australia,

· you have a permanent place to live in the Country A,

· you have investments and back accounts in the Country A and Country B,

· you have social and family connections in the Country A, and

· you are currently unemployed in the Country A, with intentions to gain employment in the Country A.

Therefore, you are not considered to have established a permanent place of abode in Australia.

Accordingly, you are not a resident under the domicile test.

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.

You intended to stay in Australia for longer than 183 days. However, you are not a resident of Australia under the 183 day test as you were in Australia for less than 183 days.

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.

Neither you nor your spouse are a member of the PSS or an eligible employee for the purposes of the CSS.

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

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 during the 2009-2010 income year.