Edited version of your private ruling

Authorisation Number: 1012104536421

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Subject: Residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts

You were born in and are a citizen of Australia.

You left for Country x a number of years ago with your spouse to work.

You packed your belongings and furniture and moved to Country x.

You purchased furniture in Country x to furnish your house.

You and your spouse left Country x to work in Country z.

You sent some of the furniture purchased in Country x to Australia and some went with you to Country z.

You purchased additional furniture for Country z.

You and your spouse purchased a house for a family member in Australia.

This was rented to your family member for a few years.

You and your spouse purchased another property in Australia.

You purchased furniture for this property as the furniture in storage was not suitable for the property.

You had a dependant work visa for Country x which expired when your spouse resigned from work in Country x.

You have a dependant work visa for Country z.

Your spouse was employed on a permanent work contract with no end date while in country x.

Your spouse is on fixed term contracts in Country z. These contracts are renewed as many times as the employer desires and as work allows.

You have been living in Country Z as much as possible between commitments in Australia.

You have a home in Country z which is furnished and has all your personal belongings such as photos and collectables.

You intend to live with your spouse overseas.

You paid money into your superannuation policy in Australia.

You saved money into FSP Australia.

Your family member became ill when you were in country x.

Them being sick was one of the reasons you and your spouse moved to Country z to be closer to them.

You have been caring for your family member.

You and your spouse will be moving back to Country x from Country z for work.

Neither you nor your spouse are or have been a Commonwealth Government employee.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision  

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Subsection 995-1(1) of the 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 first two tests are examined in detail in Taxation Ruling IT 2650: Residency - Permanent Place of Abode outside Australia.

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 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'.

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.

In your case your spouse is working in Country z.

You visited your spouse in Country z on three occasions for short periods.

Your spouse returned to Australia and your home on a regular basis.

You continued to work and visit family and friends in Australia.

Your behaviour is consistent with that of a person residing in Australia according to ordinary concepts.

And you are a resident of Australia for taxation purposes according to this test.

Domicile

There are essentially 3 types of domicile that an individual can have:

· the domicile of origin;

· the domicile of choice; and

· The domicile of dependency.

Basically, the domicile of origin of an individual is where the individual was born. 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 e.g., through having obtained a migration visa, a working visa. Even for a substantial time such as 2 years would not be sufficient evidence of an intention to acquire a new domicile.

In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind.

You were born in Australia and are a citizen of Australia. Therefore, your domicile of origin is Australia.

You are not a citizen of any overseas country and therefore you retain your Australian domicile.

As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia.

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.

An individual who establishes his or her home (in the sense of a dwelling place; a house or other shelter that is the fixed residence of a person, family or household) in an overseas country would tend to show that the place of abode in the overseas country is permanent.

In your case:

You remained in Australia while your spouse worked in country z

You made three short trips to country z

You have a home in Australia which you remained in while your spouse was in country z

You have family in Australia

You continued to work in Australia

You travelled within Australia to visit family and friends

The Commissioner is not satisfied that you have established a permanent place of abode outside Australia; therefore you are a resident under this test.

As you are a resident under the resides and domicile tests it is not necessary to look at the 183 day and superannuation tests.

Your residency status

You are a resident of Australia for taxation purposes.

As a resident of Australia for taxation purposes you are required to declare income derived in both Australia and overseas in your Australian tax return.