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Ruling

Subject: Residency

Question

Are you a resident of Australia for tax purposes for the period of July 2010 to September 2011?

Yes.

This ruling applies for the following periods

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Australia is your country of origin and you are an Australian citizen.

You departed Australia in July 2010 to spend time with family in country A.

You returned to Australia in September 2011.

You worked in country A while you were there.

Tax has not been withheld from your income.

You returned to Australia for 1 week to attend a family members birthday.

You lived in rental accommodation while in country A.

You do not have any assets in country A.

You have a home in Australia which was rented out while you were in country A.

You received rent of $ per week which was paid monthly.

Your spouse accompanied you in country A.

You and your spouse have never been Commonwealth Government of Australia employees.

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 were residing in country A as evidenced by:

· living in rental accommodation

· you were working in country A

· your spouse accompanied you , and

· you lived and worked in country A so that you could spend time with family.

Therefore, you were not considered to be residing in Australia.

The domicile test

If a person's domicile is Australia they will be 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.

You went to country A with your spouse to visit friends and relatives, you did not intend to stay long and you always intended to return to Australia

Therefore you have maintained your Australian domicile.

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 own a residence in Australia,

· You lived in rental accommodation while in country A,

· You do not have any assets in country A,

· you rented out your residence while you are away, and

· Your reason for working and living in country A was to spend time with family.

The Commissioner is not satisfied that you have a permanent place of abode outside Australia.

There as you domicile is Australia and you do not have a a permanent place of abode outside Australia you are a resident of Australia.

The 183-day test

This test does not apply to as you were not in Australia for over 183 days during your absence.

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 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 a resident of Australia under the domicile test.