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Ruling
Subject: Residency
Question
Are you a resident of Australia for tax purposes?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You are an Australian citizen and Australia is your country of origin.
You departed Australia in a previous financial year.
You have taken up temporary employment in country A.
Your employment contract expires soon and can be extended.
You intend completing your contract in country A and returning to Australia to resume employment in Australia.
You plan to return to Australia in a future financial year.
Since first leaving Australia you have returned a few times for short periods.
You reside at your place of employment in country A while you are there.
You have two bank accounts in country A.
In Australia you have a permanent place of abode. Your occupation guarantees a permanent place to live in Australia.
In Australia you own two rental properties and have two bank accounts.
You pay taxes on your salary and bank interest in country A.
Your family has not accompanied you overseas.
You do not have a spouse.
Your social connections in Australia include family, friends, and parishioners. You do not have any sporting connections.
Your social connections in country A include friends and parishioners, and you have a gym membership.
You have never been a Commonwealth Government of Australia employee.
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. 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'.
We consider you were residing in country A as evidenced by:
· living in accommodation provided by your employer there
· being in continuous employment there
· your intention to remain working in country A until the end of your contract, and
· your bank accounts and social and sporting connections in country A.
Therefore, as you were residing in country A, you were not considered to be residing in Australia.
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.
A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.
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.
You are an Australian citizen. As you have not applied for permanent residency or citizenship in country A, we consider your domicile is unchanged.
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, since you moved to country A you have been living in accommodation provided by your employer, so the Commissioner is satisfied that you have a permanent place of abode there.
As the Commissioner is satisfied that you have a permanent place of abode outside Australia you are not a resident under this test
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.
As you were not present in Australia for more than 183 days in the financial year, you are not a resident for tax purposes 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. To be eligible to contribute you must be or have been a Commonwealth Government employee.
You will not be treated as a resident under this test as you have not worked for the Commonwealth Government of Australia and so cannot be a member of the CSS or PSS. Further you do not have a spouse and are over 16 years old.