Edited version of private ruling

Authorisation Number: 1011788964711

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Ruling

Subject: residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts

You were born overseas.

You are not a citizen of Australia.

You are working in Australia.

You will be in Australia for a number of years.

You sold your home overseas to purchase a home in Australia.

Your spouse has accompanied you to Australia.

You have some investments overseas.

You will leave Australia when you retire.

Neither you nor your spouse are or have ever been Commonwealth of Australia 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  

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Subsection 995-1(1) of the 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 have been living in Australia since xxxx and you intend to be living in Australia until your work contract ends in xxxx. As you will be living in Australia, you would therefore be considered to be residing in Australia according to ordinary concepts.

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 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 a house in Australia;

· your spouse has accompanied you to Australia; and

· your work contract is for more than two years.

You have not demonstrated an intention to make your home indefinitely in Australia and consequently you do not satisfy the domicile test. However, you have established a permanent place of abode in Australia.

The 183 day test

When a person is present in Australia for 183 days during the year of income the person will be a resident, 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 will be present in Australia for more than 183 days and therefore you are considered to be 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.

Neither you nor your spouse is eligible to contribute to the above super funds.

· You are not a resident under this test.

· Your residency status

· You are a resident of Australia for taxation purposes.

As mentioned above, residents of Australia for taxation purposes are required to declare all income derived from both within and outside Australia in their Australian tax returns.