Edited version of private ruling

Authorisation Number: 1011839820706

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Ruling

Subject: Residency

Question and answer

Are you an Australian resident for tax purpose?

No.

This ruling applies for the following period:

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commences on:

1 July 2010

Relevant facts and circumstances

We previously made a ruling in 2007 but you have informed us of a change in your circumstances and asked for a replacement ruling.

You are an Australian citizen and Country A national.

You spouse suffers from a medical condition and has not been able to work.

Your spouse received income protection insurance payments for a number of years after they were unable to work.

When your spouse's income protection payment ceased, they qualified for the disability support pension from Centrelink.

You are your spouse's carer and receive the carer's pension from Centrelink.

You have been living in Country A with your spouse and child for a number of years because the warm climate is suited to your spouse's medical condition.

You and your spouse have not returned to Australia since.

You do not require a visa to live in Country A.

Your child who was born in Australia is attending primary school in Country A.

You and your family have stayed at your relative's place ever since you moved and intend to stay at the same place whilst you are in Country A.

You and your spouse intend to return to Australia when your spouse's health improves.

You and your spouse also intend to return to Australia if your spouse's health deteriorates.

You do not have any sporting, religious or social connections in Country A.

You had a number of bank accounts in Australia but now you have one joint account active.

You have a family home in Australia which is currently being rented out through a real estate agent.

You received a private ruling from the Australian tax office in 2007.

The ruling advised that you were considered to be an Australian resident for tax purpose for the financial year ending 30 June 2006 to 30 June 2010.

Relevant legislative provisions

Subsection 995-1(1) of the Income Tax Assessment Act 1997.

Subsection 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purposes 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. These tests are:

· the resides test

· the domicile test

· the 183 day test

· 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. If the primary test is satisfied the remaining three tests do not need to be considered.

However, where an individual does not reside in Australia according to ordinary concepts, they may 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. 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'.

As you are residing outside Australia from the date of your departure in May 27 2005, you are not considered to be residing in Australia during the period you stay in Country A.

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 domicile outside of Australia.

"Domicile" is a legal concept to be determined according to the Domicile Act 1982 and to the common law rules which the courts have developed in the field of private international law. The primary common law rule is that a person acquires at birth a domicile of origin, being the country of his or her father's permanent home. This rule is subject to some exceptions. For example, a child takes the domicile of his or her mother if the father is deceased or his identity is unknown. A person retains the domicile of origin unless and until he or she acquires a domicile of choice in another country, or until he or she acquires another domicile by operation of law (Henderson v. Henderson [1965] 1 All E.R.179; Udny v. Udny [1869] L.R.1 Sc.& Div. 441; Bell v. Kennedy [1868] L.R.1 Sc.& Div. 307 (H.L.)) .

In determining a person's domicile for the purposes of the definition of "resident" in subsection 6(1), it is necessary to consider the person's intention as to the country in which he or she is to make his or her home indefinitely. Thus, a person with an Australian domicile but living outside Australia will retain that domicile if he or she intends to return to Australia on a clearly foreseen and reasonably anticipated contingency.

Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. 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 e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice. 

Based on the following you

· Went to Country A to live indefinitely due to your spouse's illness.

· Intend to return if your spouses health improves or if they need medical attention.

· You have proved that you do not have an intention to make your home indefinitely outside Australia. Therefore the Commissioner is satisfied that you have a domicile in Australia.

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 live in Australia in the foreseeable future does not prevent the taxpayer setting up a permanent place of abode elsewhere in the meantime.

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.

Some of the factors which have been considered relevant by the Courts and Boards of Review/Administrative Appeals Tribunal and which are used by this Office in reaching a state of satisfaction as to a taxpayer's permanent place of abode include:

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

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

· whether the taxpayer has established 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), outside Australia;

· whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

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

· the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

On balance as:

You have been residing in Country A for over 5 years

You intend to stay in Country A indefinitely and will only return to Australia if your spouses health improves or if they require medical attention.

During your stay in Country A you have remained at a fixed place of residence

You have cancelled two bank accounts and now have one active account in Australia.

You have a primary residence in Australia which you organised to rent when you moved to Country A

Your child's place of education is in Country A.

Although you have a house in Australia and you have a bank account, your tie to Country A is stronger. Therefore the Commissioner considers that you have established a permanent abode outside Australia

As you have proved that you have an intention to make your home indefinitely outside Australia and have established a permanent place abode outside Australia, the Commissioner is satisfied that you have a domicile outside Australia. Therefore you are not an Australian resident for taxation purposes under this test.

The 183-day test

Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that:

· your usual place of abode is outside Australia, and

· you have no intention to take up residence here.

As you were outside Australia for more than 183 days, 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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

This test does not apply to you as you are not an employee of the Commonwealth Government of Australia.

Your residency status

As you do not satisfy the Domicile test, you are not a resident of Australia for taxation purposes under the domicile test.