Edited version of private ruling

Authorisation Number: 1011857356183

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Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes?

Yes.

This ruling applies for the following periods

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts

You were born in Australia and are an Australian citizen.

You departed Australia to work in country A in December 2009.

You have only returned to Australia for short visits with family and friends.

You have a country A crew visa.

You intend continuing to work outside Australia for the foreseeable future.

You only intend returning to Australia to visit family and friends.

You are employed by a company in Country A on a contract basis.

You live and work on cruise ships in country A and the Pacific.

You will sometimes be working in the territorial waters of numerous countries while on the cruise ship.

You do not have any assets in the country A.

You are looking at purchasing a residence in country A.

When you lived in Australia you shared the expenses of a home with a friend. You pay a weekly amount to store items on the property and to use the facilities of the property when you are in Australia.

You have bank accounts in Australia and a property which is being discussed with your former spouse in court.

You have an employment contract for your work in country A until January 2012 which can be extended indefinitely.

You do not pay tax in country A.

Your children are currently not living with you but it is planned that they will visit you this financial year.

You do not have social or sporting connections in Australia.

You do not have social or sporting connections in country A.

You have never been a Commonwealth Government of Australia employee.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Residency

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:

· 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 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. 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 are currently residing in country A as evidenced by:

· living and working on cruise ships there

· your intention is to work in country A until the end of your contract, and

· you do not intend to return to Australia in the foreseeable future.

Therefore, you are not considered to be residing in Australia. However, we need to consider the other tests.

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 permanent place of abode outside of Australia.

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.

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 in country A you are living on cruise ships where you also work,

· you will sometimes be working in the territorial waters of numerous countries,

· you and your former spouse have a property in Australia which is being dealt with through court,

· you are considering purchasing a property in country A,

· you maintain an association with Australia through family and friends,

· your children live in Australia,

· you pay a weekly amount to store items at a property, where you also stay when you return to Australia to visit,

· you have bank accounts in Australia,

· you do not have any assets in country A.

There is no evidence that you have made your home indefinitely in another country. Therefore, you have maintained your Australian domicile.

Although you were overseas for a significant period of time in 2010 we consider you have not established a permanent home outside Australia as your accommodation while being employed on the cruise ship is of a transitory or temporary nature. Your associations with Australia are more significant than those overseas as you have not acquired any assets or social ties in another country but have retained all your assets in Australia and returned to Australia for a period of time to stay with your family and friends.  

Based on these facts, the Commissioner considers your permanent place of abode to be in Australia.

As your domicile is in Australia and it is considered that you have not established a permanent place of abode outside Australia, you are therefore a resident of Australia for tax purposes under the domicile test.

The 183-day test

This test does not apply to you as after your departure you will not be in Australia for over 183 days in any year.

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. 

You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person.

Your residency status

You are considered to be a resident of Australia in accordance with subsection 6(1) of the ITAA 1936.