Edited version of private ruling

Authorisation Number: 1011809402405

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Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for taxation purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

You are a citizen of Australia and another country.

Your country of origin is Australia.

You left Australia in the 2010-11 income year and you are currently working in a foreign country.

You have a Permanent Residency Visa and a Foreign Residence ID for that country.

During the year ending 30 June 2011 you will be working overseas for in excess of 180 days.

You intend to continue working overseas for in excess of 2 years.

You intend to reside overseas permanently for the foreseeable future.

You do not intend to return to live in Australia permanently at the conclusion of your work.

You will return to Australia for holidays to visit friends and relatives, depending upon the availability of holidays from your employer

Your employer has provided you with permanent accommodation in the foreign country.

You do not have a permanent place of abode within Australia. You rented your own premises while living in Australia and at different times lived with relatives.

You do not have any assets overseas due to the fact that no assets can be obtained without a residency card, which you have only recently obtained.

You have a bank account, and some personal items in Australia. You do not own any freehold property in Australia.

You are employed full-time in the foreign country but you do not have a signed employment contract.

Your family did not accompany you overseas.

You do not have any social or sporting connections with Australia.

In the foreign country you play sport, attend a regular social night with work colleagues and one other regular recreational pursuit.

You are not and have never been a Commonwealth Government of Australia employee.

Relevant legislative provisions

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

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Residency Status

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 which will help us ascertain whether you are a resident of Australia for income tax purposes. These tests are:

· the residence according to ordinary concepts test;

· the domicile and permanent place of abode test;

· the 183 day test; and

· the Commonwealth superannuation fund test.

The primary test for deciding your residency status is whether you reside in Australia according to the ordinary meaning of the word resides. However, where you do not reside in Australia according to ordinary concepts, you may still be considered to be a resident of Australia for tax purposes if you satisfy the conditions of one of the other three tests.

The residence according to ordinary concepts 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'.

As you have been residing in the foreign country since leaving Australia, you are not a resident of Australia for tax purposes under this test.

The domicile and permanent place of abode 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.

There are essentially 3 types of domicile that an individual can have:

· the domicile of origin;

· the domicile of choice; and

· the domicile of dependency.

Basically, your domicile of origin is the where you were born. In order to show that you have chosen a new domicile of choice in a country outside Australia, you must be able prove an intention to make your home indefinitely in that country. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind.

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.

IT 2650 lists the following relevant factors to be taken into account in determining a person's permanent place of abode:

· the intended and actual length of the individual's stay in the overseas country;

· whether the individual intended to stay in the overseas country only temporarily and then move on to another country or to return to Australia at some definite point in time;

· whether a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household) has been established outside Australia;

· abandonment of residence or place of abode in Australia;

· duration and continuity of the individual's presence in overseas country; and

· durability of association that the individual has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments he or she is leaving permanently, family ties and so on.

The weight given to each factor varies with the circumstances of each individual taxpayer. Applying your circumstances to the above criteria:

You left Australia and only plan to return to Australia to visit friends and family.

You are employed full-time in a foreign country but you do not have a signed employment contract.

You do not intend to return to live in Australia permanently at the conclusion of your work.'

You intend to reside overseas permanently for the foreseeable future.

Your employer has provided permanent accommodation for you in the foreign country.

You were renting your accommodation in Australia and you do not own any freehold property in Australia.

You have a bank account, and some personal belongings in Australia.

You do not have any social or sporting connections with Australia, however you play sport, attend a regular social night with work colleagues and participate in other recreational activities in the foreign country.

You advise that you intend to reside overseas permanently for the foreseeable future, however you have not stated that it is your intention to make the country you are currently working in your permanent home. For this reason, you will maintain your domicile in Australia. However, based on the facts outlined above, you have established a permanent place of abode outside Australia and you are not a resident of Australia under this test.

The 183-day test

Under this test you are considered to be a resident of Australia if you are actually present in Australia for a total period of more than half the year of income, unless your usual place of abode is outside Australia.

You are not a resident under this test as you will not be present in Australia for more than 183 days for the years ending 30 June 2011, 2012, 2013 and 2014.

The Commonwealth superannuation fund test

An individual is still considered to be a resident if that person is eligible to contribute to the Commonwealth Superannuation Scheme (CSS) or Public Service Superannuation Scheme (PSS), or that person is the spouse or child under 16 of such a person.

In your case, you are not a member of the CSS or the PSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test.

Your residency status

You are not a resident of Australia for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936.