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Edited version of private ruling
Authorisation Number: 1011851745946
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Ruling
Subject: Residency status
Question
Are you considered a foreign resident from the date of your departure from Australia?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2010
Year ended 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commences on:
1 July 2009
Relevant facts and circumstances
We previously made a ruling on 1 July 2007 but you have informed us of a change in your circumstances and asked for a replacement ruling to apply from 1 July 2009.
On 1 July 2009, you left Australia for an indefinite period.
You resided in Country B.
You and your spouse prepared your family home to be leased out.
The lease term is for X months, and your family home in Country A is on the second X month lease term.
You and your spouse either sold or gifted many of your personal effects.
Later in the 20XX income year, you were reassigned to the capital city of Country C.
Your employer has provided you with a motor vehicle and an apartment in this city that has a lease term of X years with options to extend.
You are entitled to X days recreation leave per annum that you use to return to Australia and visit your adult children.
Your spouse resides with you in Country C.
You both have Country C residency status.
You are both members of a club in the city.
You have overseas accounts, pensions/savings plans and an employee stock purchase plan.
You intend to remain overseas for the foreseeable future.
Neither you nor your spouse have been employees of the Commonwealth Government of Australia
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 6(1).
Reasons for decision
The terms 'resident' and 'resident of Australia', in regard to an individual, are described in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).
The definition includes four tests to assist in determining whether you are 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 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 meet the conditions of one of the other three tests.
The resides test
The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.
As you and your wife are staying in the capital city of Country C for approximately X months of the year, you are not considered to be residing in Australia under this test for that period.
The domicile test
In order to show that a new domicile of choice in a country outside Australia has been adopted, you must be able to prove an intention to make your home indefinitely in that country.
A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.
In your case, you left Australia for an indefinite period on 1 July 2009. You have leased out your family home. You have either sold or gifted many of your personal effects in Australia. You and your spouse reside in Country C. You have a motor vehicle and an apartment in the capital city that has a lease term of X years with an option to extend. You intend to remain overseas for the foreseeable future.
Based on these facts, it is considered that you have established a permanent place of abode outside Australia.
The 183-day test
This test does not apply to you as it has been identified that your permanent place of abode is in a foreign country.
The superannuation test
An individual is still considered to be an Australian resident for tax purposes if that person is eligible to contribute to a Commonwealth superannuation scheme such as the PSS or the CSS, or that person is the spouse or child under 16 of such a person.
This test does not apply to you as you are not eligible to contribute to the PSS or the CSS.
Your residency status
In your case, you are not considered to be an Australian resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 from the date of your departure.