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Ruling
Subject: Residency for tax purposes
Question and answer
Are you a resident of Australia for taxation purposes?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
You are a citizen of, and were born in, Australia.
You have worked all your life in Australia.
You intend to work overseas.
You will be temporarily out of the country.
At present there is no time frame on how long and for how many years you will carry out your work.
Your spouse will accompany you overseas
You own your own home in Australia.
You will rent the house out.
You intend to return to your home to live when you return to Australia.
You will declare income from your property in the relevant tax returns.
Major household items will remain in the home.
Other items such as personal affects will be stored in the garage.
Your remaining income will come from your superannuation fund.
You do not expect to derive any foreign income.
Your family live in Australia.
You will not become a resident of the overseas country.
Neither you nor your spouse have been or are current Commonwealth Government employees.
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
Subsection 995-1(1) of the Income Tax Assessment Act 1997 (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.
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. 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'.
In your case you will travel overseas to work on a temporary basis.
You will rent your house out.
You will return to the house when you return to Australia.
Your family will remain in Australia.
Your spouse will accompany you overseas.
You intend to return to Australia at the end of each volunteer period.
You are therefore residing in Australia according to ordinary concepts and are a resident under this test.
As you are a resident under the resides test it is not necessary to look at the domicile, 183 day and superannuation tests.
Your residency status:
You will be a resident of Australia for taxation purposes for the periods you work overseas.