Edited version of your private ruling

Authorisation Number: 1012104358798

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Ruling

Subject: Residency status

Questions and answers:

1. Are you a resident of Australia for tax purposes until your spouse leaves Australia permanently to live with you overseas?

Yes

2. Will you be a resident of Australia for tax purposes from the date your spouse leaves Australia permanently to live with you overseas?

No

This ruling applies for the following periods:

Year ended 30 June 2010

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 2009

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.

Your country of origin is Australia.

You left Australia on date A in the 2009-10 income year for work purposes.

You hold a resident visa work permit for Country X.

Your current employment contract is for X years.

For the next few years you will be living in several countries.

You are currently living in guest house type accommodation of a permanent nature.

Your spouse is working living in Australia. It is their intention to work for another year before joining you overseas.

Your family home was sold. Your spouse lived in a unit in Australia. Your spouse purchased another property in Australia in their name where they have been living since settlement.

Since leaving Australia, you have returned frequently to visit your spouse.

You do not possess any assets overseas but looking at opening bank accounts soon.

Your plan is to live and work overseas indefinitely.

You do not possess any other assets in Australia.

You do not have any social or sporting commitments with Australia.

You are considering joining a gym overseas or joining a club.

You are not eligible to contribute to the Public Service Superannuation (PSS) or the Commonwealth Superannuation Scheme (CSS).

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 overseas since date A and it is your intention to live and work overseas indefinitely, 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.

You were born in Australia and are an Australian citizen and thus your domicile is 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 until your spouse joins you, you will be an Australian resident for tax purposes under the domicile test as your associations with Australia will be more significant. This is because:

· Your spouse is living and working in Australia and thus your emotional ties are in Australia.

· Your spouse has two properties in Australia and is living in one of them.

· Since leaving Australia you have been visiting your spouse frequently.

· You are staying overseas in guest house type accommodation

· You do not possess any assets overseas apart from bank accounts which you are planning to open.

· Based on these facts you have not yet established a permanent place of abode outside Australia. Accordingly you are a resident of Australia under the domicile test.

· Once your spouse ceases employment in Australia and joins you overseas, you will not be an Australian resident for taxation purposes under the domicile test for the following reasons:

· Your spouse will join you overseas so your emotional ties will no longer by in Australia.

· Your plan is to live and work overseas indefinitely.

· You will not have any assets in Australia.

· You are considering joining a gym overseas or joining a gun club.

As mentioned, the expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. As your spouse will be living with you, your place of abode will be overseas. Further a permanent place of abode does not have to be 'forever' and thus your permanent place of abode will be overseas.

Thus you will not be a resident of Australia under domicile test from the date your spouse leaves Australia to join you.

The 183-day test

When 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. 

This test does not apply to you as you have not been living in Australia since your departure on date A.

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 until your spouse joins you overseas you are a resident of Australia for tax purposes. From the date your spouse joins you overseas, as you will not be a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you will be a non-resident of Australia for taxation purposes.