Edited version of private ruling

Authorisation Number: 1011834453254

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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 period:

Year ended 30 June 2010

The scheme commenced on:

1 July 2009

Relevant facts

You were born overseas.

You lived in Australia.

You left Australia a number of years ago.

You went overseas to work.

You will return to Australia if you get a career opportunity and a good school for your child.

You would like to retire in Australia with your Australian spouse.

The purpose of all visits was to see your then fiancé and to visit friends while checking on your property.

You and your spouse have purchased a property overseas.

You have a number of investments overseas.

You have a number of investments in Australia.

You have a work contract overseas. This work contract is indefinite.

Your parents have always lived overseas.

Your spouse moved overseas in 20XX and you were married in 20XX.

Your spouse's parents live in Australia and you still contact friends in Australia.

You and your spouse no longer work as 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:

1. the resides test

2. the domicile test

3. the 183 day test

4. the superannuation test

The first two tests are examined in detail in Taxation Ruling IT 2650: Residency - Permanent Place of Abode outside Australia.

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 left Australia a number of years ago to go overseas. You left Australia indefinitely. You are therefore not residing in Australia according to ordinary concepts and you are not a resident of Australia for tax purposes according to this test.

The domicile 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 three types of domicile that an individual can have:

· the domicile of origin;

· the domicile of choice; and

· the domicile of dependency.

Basically, the domicile of origin of an individual is the where the individual was born. In order to show that a new domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

In your case, you were born overseas, you are a citizen of an overseas country and you are living overseas. Therefore, your domicile is overseas and as such you are not a resident of Australia under this test.

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 were not in Australia for more than 183 days during the financial year ending 30 June xxxx and therefore 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.

In your case, neither you, nor your spouse, are current Commonwealth government employees and therefore you are not able to contribute to the abovementioned superannuation schemes.

Therefore, you are not a resident of Australia under this test.

Your residency status

As you do not meet any of the above tests of residency, you are a non-resident of Australia.