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Edited version of private ruling
Authorisation Number: 1011912906181
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Ruling
Subject: Residency
Question and answer
Are you a non resident of Australia from the date you left Australia to move overseas permanently?
Yes
This ruling applies for the following period
Year ended 30 June 2009
The scheme commenced on
1 July 2008
Relevant facts
You are an Australian citizen.
You have lived and worked in Australia for most of your working life.
You departed Australia to move to Country X to live with your wife and new child and to work.
You have no intention of returning to live in Australia.
You hold a retirement visa which will be renewed in a simple administrative process.
You are also required to report to the immigration office every three months to confirm that you are still married and living in a district of Country X.
You built a house in Country X.
You maintain an Australian bank account which is used to pay your salary in Australian dollars.
You own an apartment in Australia which is now occupied by a friend who maintains the property but lives there rent free. You also own a block of land in Australia.
You have never been an employee of the Commonwealth of Australia.
Since departing Australia to live in Country X, you have returned to Australia on two occasions for short visits.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 6(1)
Reasons for decision
An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be 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 for income tax purposes. These tests are:
· the resides test,
· the domicile test,
· the 183 day test, and
· 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 as residency for Australian tax purposes has been established.
Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the 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'.
You have established a home in Thailand where you live with your wife and child and work nearby in a mine. You have been living in Thailand since August 2008. You have also stated you intend to live permanently in Thailand and have no intention of returning to live in Australia. Accordingly you are not residing in Australia.
As you do not meet the resides test, we will need to consider whether you meet any of the other three tests of residency.
The domicile test
Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.
Domicile
Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.
Taxation Ruling IT 2650 Residency - permanent place of abode outside Australia provides that the common law test of domicile of choice has now been restated in section 10 of the Domicile Act which states that the intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his home indefinitely in that country.
In determining a person's domicile for the purposes of the definition of resident in subsection 6(1) of the ITAA 1997, 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.
You have stated that you have no intention of returning to Australia to live as you have built a house in Country X and live there with your wife and child. You have been granted a retirement visa. It is considered that you have established your domicile in Country X.
Therefore, under the domicile test you will be a non resident of Australia for tax purposes from the time you left Australia to move to Country X.
The 183 day test
Where 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.
As you have not been present in Australia for more than one-half of the income year you are not a resident under the 183 day test.
The superannuation test
An individual is still considered to be a resident of Australia if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) of the Commonwealth Service 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.
You have never been an employee of the Commonwealth of Australia and therefore do not meet the above conditions you are not a resident under this test.
Conclusion
As you do not meet any of the above tests, you are not a resident of Australia for tax purposes. As you are not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income only includes income gained from sources in Australia.