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Ruling

Subject: Residency

Question 1

Are you a resident of Australia for tax purposes for the financial years ending 30 June 20xx, 30 June 20xy, and 30 June 20xz?

Answer: No.

Question 2

Are you a resident for tax purposes for the financial year ending 30 June 20xa?

Answer: Yes.

This ruling applies for the following periods

Year ended 30 June 2012

Year ended 30 June 2011

Year ended 30 June 2010

Year ended 30 June 2009

The scheme commenced on

1 July 2008

Relevant facts

You are a citizen of country A and Australia.

You are on the electoral roll in country A and Australia.

You worked and lived in Australia continuously for over 20 years.

Your children were born in Australia.

You lived and worked in country A with your family for approximately 10 years.

Your son returned to live in Australia approximately 7 years ago.

Your child and their spouse returned from country A to live in Australia approximately 3 years ago.

Your spouse is an Australian and country A citizen and is a resident of country A for tax purposes.

You purchased a property in Australia approximately 4 years ago.

You own a property in country A.

You have resided in Australia for the following periods:

· 20xz -xa: just less than 6 months

· 20xy -xz: between 1 and 3 months

· 20xx -xy: between 1 and 3 months

· 20xw - xx: between 1 and 3 months

You intend to reside in both country A and Australia.

In your retirement you intend spending the majority of your time in Australia with your spouse as the majority of your family live here.

You have a brother and mother-in-law who live in country A.

You live in your property when you are in Australia.

You live in a property you own when in country A.

Your assets overseas include your country A residence, bank account and savings account.

Your assets in Australia include your home, ComSuper pension, allocated pension fund and bank accounts.

For a period of 6 years you received income from some consultancy work in country A.

You receive income from your Comsuper pension fortnightly, and from the allocated pension annually.

Since 20xz you have received a country A age pension.

When you are away from Australia your child resides in your property, and when you are away from country A no one resides in the country A property.

You believe you are not an eligible employee of the Commonwealth Superannuation Scheme (CSS). You have not stated you are a member of the PSS. Your wife has never worked for the Commonwealth of Australia.

You are over 16 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

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

Reasons for decision

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) and section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

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'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia states that a person is a resident of Australia for tax purposes under the resides or ordinary concepts test when their behaviour over a considerable time demonstrates a degree of continuity, routine or habit that is consistent with residing here. The Commissioner's view of the law is that six months is a considerable time when deciding whether the individual's behaviour is consistent with residing here. However those individuals who are in Australia for less than six months may also be able to establish that they reside here depending on their circumstances.

Taxation TR 98/17 sets out the following factors to consider when assessing whether a person's behaviour is consistent with residing here:

· intention or purpose of presence

· family and business/employment ties

· maintenance and location of assets

· social and living arrangements.

In your case:

· You lived with your family in country A for the majority of time in the years that are the subject of the ruling,

· You have a home in country A and in Australia,

· The purpose of your visits to Australia have been to live in your residence here in a regular day to day capacity,

· You do not rent out your Australian property when you return to country A,

· For several years you worked as a consultant in country A,

· You retired recently,

· The majority of your family live in Australia, and

· Your assets in Australia include your home, ComSuper pension, allocated pension fund and bank accounts.

Based on this information you were not residing in Australia for the financial years ending 30 June 20xz, 30 June 20xy, and 30 June 20xx as your behaviour in Australia did not reflect a degree of continuity, routine or habit that is consistent with residing here. During this period of time you were undertaking consultancy work in country A and did not live in Australia for 6 months or more. Your usual day to day living was spent doing consultancy work in country A whereas the time you were in Australia you were not working.

For the financial year ending 30 June 20xa the Commissioner considers that your behaviour does reflect a degree of continuity, routine or habit that is consistent with residing in Australia. During this time you are/will be living in Australia as a retiree in your property with your spouse. For this period of time you are considered a resident of Australia for tax purposes.

As you are a resident for tax purposes under the resides test for the financial year ending 30 June 20xa the domicile test, the 183-day test, and the superannuation test do not need to be considered for this period.

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

Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases.

Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.

Generally speaking, 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 by operation of law.

In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

You are a resident of country A and Australia. During the financial years ending 30 June 20xz, 30 June 20xy, and 30 June 20xx you spent the majority of your time working as a consultant and living in your home in country A. For this period of time your domicile of choice is considered to be outside of Australia.

The 183-day test

Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, that is 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia.

You were not present in Australia for more than 183 days in any of the years in question, therefore, you are not a resident 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) as a member or the Commonwealth Superannuation Scheme (CSS) as an eligible employee, or that person is the spouse or child under 16 of such a person.

The Commonwealth superannuation fund test is only relevant to Commonwealth Government employees.

Although you are receiving a Comsuper pension, you consider you are no longer a CSS eligible employee and you have not stated that you are a member of the PSS. Your spouse has never worked for the Commonwealth of Australia, and you are over 16 years of age. Therefore, you are not a resident under the superannuation test.