Edited version of your private ruling

Authorisation Number: 1012113823171

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Subject: Resident status

Questions and answers:

1. Are you a resident of Australia for taxation purposes from the date you depart Australia?

No.

This ruling applies for the following periods:

Year ended 30 June 2010.

Year ended 30 June 2011.

Year ended 30 June 2012.

The scheme commenced on: 1 July 2010.

Relevant facts:

You are a citizen of Australia.

You were born in Australia.

You do not intend to reside in Country X permanently.

You moved overseas in order to work.

You have an employment contract, which can be extended.

You intend to be employed overseas for the term of the contract and will reassess your employment at the end of the X years with the possibility of an extension.

You are currently paying tax in overseas.

You have a permanent place to live overseas.

You were supplied a house, in which you now live.

The house is in a town nearby to your place of work.

You have retained an Australian bank account and home in Australia which you live in when you are on your occasional short breaks. You do not return to Australia often.

On your return trips you attend to personal affairs, make social visits and recuperate.

Your family has not accompanied you overseas, as no longer compatible.

You are separated from your spouse.

Your spouse lives in your Australian residence.

You do not share any living quarters with your spouse when you reside in your house in Australia on your return trips.

Your children are adults and do not reside in your Australian house.

You have an overseas bank account.

When you first moved overseas you were issued a working visa.

You were granted residency overseas some time later.

Your life revolves around Country X.

You have never been employed by the Commonwealth of Australia.

You are not a member of the Public Sector Superannuation Scheme (PSS) nor an eligible member of the Commonwealth Superannuation Scheme (CSS), nor are you an eligible employee, or the spouse or a child under 16 of a person who is a member/eligible member of the PSS or CSS

Assumptions:

N/A

Relevant legislative provisions:

Section 6-5 of the Income Tax Assessment Act 1997.

Reasons for decision

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, and

· 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 will 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 are currently residing in Country X as evidenced by:

• working full time on a X year contract,

• living in a house,

• opening an overseas bank account,

• being granted residency in Country X and paying tax there, and

• your intention to work in Country X for X years.

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

The domicile test and permanent place of abode 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.

A persons domicile is established at birth when they acquire a domicile of origin, being the country of their fathers permanent home. The domicile of origin is retained until such time as a domicile is established by choice or by operation of law in another country.

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. A domicile may be changed by operation of law for example where a person has obtained a migration visa.

In your case you have not indicated a permanent intention to change your domicile from Australia as you are retaining ownership of a property in Australia and have no firm intentions to never return to Australia. You have not currently indicated an intention to gain citizenship or a migration visa overseas.

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 have advised that it is your current intention to make your home in Country X for a minimum of Y years;

• you have a permanent place to live overseas,

• you maintain an association with Australia through your house and investments,

• you are working full time in Country X, and

• you have opened a bank account in Country X.

You have established a permanent place of abode in Country X.

Therefore you are not a resident under the Domicile test.

The 183-day test

This test does not apply to you as you will be not be in Australia for more than 183 days in any year after you left Australia to work 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. 

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

As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a non-resident of Australia for Income Tax purposes from the date of your departure from Australia to work in Country X in December 2009.