Edited version of private ruling

Authorisation Number: 1011876898824

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Ruling

Subject: residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commenced on:

1 July 2009

Relevant facts

You are a citizen of and were born in Australia.

You have a resident visa for the overseas country you are working in.

You have been working overseas for many years.

You do not intend to work in Australia.

Your work roster sees you work 20 days on and you return to Australia for 10 days.

You have investments both in Australia and overseas.

You pay tax on your taxable income overseas.

Your spouse and children have visited you overseas.

You have social connections overseas.

Neither you nor your spouse are or have ever been an employee of the Commonwealth.

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:

· 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: 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 have been working overseas for many years. You work 20 days overseas and come back to Australia for 10 days each month.

You have a home and family to which you return to each month.

You rent an apartment overseas and use this to spend your mandatory days off.

During your work time you spend rest periods away from this apartment and use hotels in which to rest.

You merely work away from home and you choose to do this outside Australia rather than in Australia.

You are therefore residing in Australia according to ordinary concepts and you are a resident of Australia for tax purposes according to this test.

As you are a resident of Australia for taxation purposes under the resides test it is not necessary to look at the domicile, 183 day and superannuation tests.

Your residency status

You are a resident of Australia for taxation purposes.

You are required to declare all your income both in and out of Australia in your Australian tax return.