Edited version of private ruling

Authorisation Number: 1011832065054

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Ruling

Subject: Residency

Questions and answers:

Are you a resident of Australia for taxation purposes from July 2009 until the date X?

Yes.

Are you an Australian resident for taxation purposes from the date X?

No.

This ruling applies for the following period:

Year ended 30 June 2010.

Year ended 30 June 2011.

The scheme commenced on:

1 June 2009.

Relevant facts:

You moved to the Country A.

You commenced employment as a locally engaged staff member on a 2 year contract with a government agency.

You had the possibility of extending the contract for a 3rd year.

You have contracts to remain in the position until June 20XX, with the possibility of a further year.

You are covered by the Country A labour laws.

You have an employee visa.

You were on leave without pay whilst working in Country A.

You have returned to Australia once for a week in 2010 to visit family.

You own no property or assets in Australia.

You maintain a rented household in the Country A with your spouse.

You will not be returning to Australia to live.

You have adult children in Australia.

You have Australian pensions and an Australian bank account.

You have now resigned from the public service with effect date X.

There has been no contributions made to the Public Sector Superannuation (PSS) since June 2009, you believe it is likely that there will be contributions upon the finalisation of your resignation (for unused leave accrued prior to June 2009).

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1936 Subsection 6(1).

Superannuation Act 1990

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:

1. the resides test,

2. the domicile test,

3. the 183 day test, and

4. 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 and spouse are have resided in the Country A since June 2009 as evidenced by:

· renting an apartment,

· working full time, and

· your intention to live in the Country A indefinitely.

Therefore, you are not considered to be residing in Australia under the resides test.

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.

You have indicated a permanent intention to change your domicile from Australia as you have established a home in Country A with financial and personal connections and have firm intentions to never return to 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 case:

· you have advised that it is your current intention to make your home in Country A indefinitely;

· you maintain an association with Australia through your family and financials,

· you are residing in the Country A with your spouse,

· you have been employed in the Country A since 2009 until date X, and

· you intend to extend your lease of property in Country A.

Therefore, you are considered to have established a permanent place of abode in Country A.

The 183-day test

You are not a resident under this test as you will not be physically present in Australia for more than 183 days in any of the income years.

The superannuation test

A taxpayer will be considered to be a resident of Australia if they are a 'member' of the superannuation scheme established by deed under the Superannuation Act 1990. The Public Service Superannuation Scheme (PSS) was a superannuation scheme established by deed under the Superannuation Act 1990.

A 'member' is a person who is a member of the PSS. Generally this would include a permanent or temporary employee of the Australian Public Service (APS). A taxpayer no longer employed by the APS is considered a 'former member' and thus has ceased to be a 'member' of the superannuation scheme for the purposes of the definition of 'resident'.

You will be treated as a resident under this test for the period of time you were a member of the PSS, that is, until your employment by the APS and membership to the PSS ceased.

Your residency status

You are considered to be a resident of Australia under the superannuation test from June 2009 until the date X.

You are not considered an Australian resident under the:

1. the resides test,

2. the domicile test,

3. the 183 day test, and

4. the superannuation test, from the date you were no longer entitled to contribute to the PSS, the date your employment ceased with a government agency in May 2011.