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Ruling
Subject: Residency status
Question and Answer
Were you a resident of Australia for tax purposes?
No
This ruling applies for the following periods:
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commences on:
1 July 2008
Relevant facts and circumstances
You are a citizen of Country X.
Your country of origin is Country X.
You have been divorced for several years and are single. You have children who live in Australia whom you visit occasionally.
You left Australia after divorce.
You have been employed by an international company and work for extended periods in remote locations in foreign countries.
You hold a two year work permit.
You reside on the site of your employer in accommodation provided by your employer, usually for two years at a time.
When not working, you live in Country Y in a residence which you have been renting since at least date A in the 2008-09 income year.
Your assets in Australia are two properties.
You do not possess any assets in Australia apart from your two properties.
You did not have any social or sporting commitments with Australia.
You do not have any intention of returning to Australia on a permanent basis.
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:
1. The resides test
2. The domicile test
3. The 183 day test
4. 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 resided overseas for the relevant period, you were 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.
Domicile
Generally specking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law.
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.
In your case, you left Australia several years back and have no intention of returning to Australia on a permanent basis. You have been living in Country Y for some years when not working. However, you have two properties in Australia and your children live here. You visit them twice a year. There is no evidence that your intention is to make your home indefinitely in Country Y. Your accommodation there is rental. Therefore you are considered to have maintained your Australian domicile.
Permanent place of abode
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 relevant period, it is considered that you were not an Australian resident for taxation purposes under the domicile test for the following reasons:
§ You are divorced and are single. You visit Australia occasionally to see your children.
§ You have been employed by an international company and work for extended periods in remote locations in foreign countries.
§ You hold a two year work permit.
§ You reside on the site of your employer in accommodation provided by your employer, usually for two years at a time.
§ When not working, you live in Country Y in a residence which you have been renting for a few years since date A.
§ You do not possess any assets in Australia apart from two properties.
§ You did not have any social or sporting commitments with Australia.
§ You do not have any intention of returning to Australia on a permanent basis.
Based on these facts, it is considered that you have established a permanent place of abode in Country Y since date A.
Thus you were not a resident of Australia under the domicile test as you established a permanent place of abode overseas.
The 183-day test
Under this test, a person is required to be actually present in Australia for a total period of more than half the year of income, unless it can be established that the person's usual place of abode is outside Australia and there is no intention to take up residence here.
As you were not in Australia for 183 days or more, you were not a resident of Australia under this test.
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.
As you are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme, you were not a resident under this test.
Your residency status
For the relevant period, as you were not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you were not a resident of Australia for taxation purposes.