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Ruling
Subject: residency
Question and answer
Are you a non resident of Australia for the year ended 30 June 2011?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You are a citizen of Country X and your country of origin is Country X.
You originally arrived in Australia on a class BN resident sub class.
Your spouse remained in Country X.
Since 2007 you have returned to Country X a number of times, on average 3 times per year. You have spent more time in Country X than Australia as your spouse and parents live there and you have a business in Country X.
You stayed with your sibling when you came to Australia and then stayed in your house that you purchased a share in.
You purchased a small business in Australia which you have now sold.
You came to Australia hoping to start a new lifestyle here with your spouse but you have found it very difficult to establish social and business ties with Australia and have decided to return to Country X permanently.
You own a house in Country X where your spouse lives and you stay there when you go back to Country X.
Your spouse occasionally visited you in Australia.
You do not have any dependant children.
In Australia you were a member of the local group.
In Country X, you are a member of a number of clubs and associations.
Your travel dates to and from Country X during the 2011 financial year were provided.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 6(1)
Reasons for decision
An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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, 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.
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.
Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the 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'.
You were living in Australia for short periods of time from when you first arrived five years ago. For the 2011 financial year you lived in Australia for less than 100 days and have left Australia permanently to return back to Country X. Accordingly you are not residing in Australia.
As you do not meet the resides test, we will need to consider whether you meet any of the other three tests of residency.
The domicile test
Under this test, a person is a resident of Australia for tax purposes if their domicile is Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.
Domicile
Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.
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 any intention to make his or her home indefinitely in that country.
You are a permanent resident of Country X as your country of origin is Country X and you are a citizen of Country X. You domicile is not Australia.
Therefore, under the domicile test you are a non resident of Australia for tax purposes.
The 183 day test
Where 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 nodes not intend to take up residence in Australia.
As you have not been present in Australia for more than one-half of the income year you are not a resident under the 183 day test.
The superannuation test
An individual is still considered to be a resident of Australia if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) of the Commonwealth Service 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.
As you do not meet the above conditions you are not a resident under this test.
Conclusion
As you do not meet any of the above tests, you are not a resident of Australia for tax purposes. As you are not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income only includes income gained from sources in Australia.