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Edited version of your private ruling
Authorisation Number: 1012018072490
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Ruling
Subject: Residency status
Question and Answer:
Are you a non-resident of Australia for tax purposes for the duration of your employment in Country X?
Yes
This ruling applies for the following periods:
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences on:
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a citizen of Australia and a citizen of Country W.
Your country of origin is Country W.
You left Australia for Country X on date A in the 2010-11 income year.
You have a resident working visa.
You have secured a 4 year employment contract with an employer in Country X. Your contract will finish after 30 June 2014.
You are separated from your spouse and children in Australia.
You have established a regular place of abode in Country X. You live in a rented flat.
You possess no assets in Australia apart from a bank account.
You have no connection with Australia, including no financial ties.
You have no intention of returning to Australia in the foreseeable future.
Your assets in Country X are a car and furniture.
Your social and sporting commitments with Country X are family and friends.
Your social and sporting commitments with Australia are family and friends.
You plan to visit your children in Australia in the next few months.
You are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1).
Income Tax Assessment Act 1997 Section 995-1.
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 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 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 dictionary meaning, 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 have resided in Country X since date A and it is your intention to reside there for at least the duration of your four year employment contract, you are not a resident of Australia for taxation purposes under the resides test.
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 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.
For the period date A to 30 June 2014, it is considered that you will not be an Australian resident for taxation purposes under the domicile test for the following reasons:
You have secured a 4 year employment contract with an employer in Country X. Your contract will finish after 30 June 2014.
You are separated from your spouse and children and thus your emotional ties with Australia are less significant.
You have established a regular place of abode in Country X. You live in a rented flat.
You possess no assets in Australia apart from a bank account.
You have no connection with Australia, including no financial ties.
Your assets in Country X are a car and furniture.
You have no intention of returning to Australia in the foreseeable future.
You have family and friends in Country X.
Based on these facts, it is considered that you have established a permanent place of abode in Country X. We have noted that you plan to visit your children in the next few months. Whilst you maintain an association with Australia with your children, family members and friends, your association with Country X is more significant.
Thus you are not a resident of Australia under domicile test as you have established a permanent place of abode overseas.
The 183-day test
This test does not apply to you as it has been established that your usual place of abode from date A in the 2010-11 income year in Country X.
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 eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme.
Your residency status from date A to 30 June 2014
From date A to 30 June 2014, as you are not deemed to be a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you are considered to be a non-resident of Australia for taxation purposes.