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Ruling

Subject: Residency

Question:

Are you a resident of Australia for income tax purposes?

Answer:

No.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ending 30 June 2013

The scheme commenced on:

On or after April 2010.

Relevant facts and circumstances

You are an Australian citizen.

You have been living and working outside of Australia since some time in the 2009-10 income year.

You have spent two years in Country A on a working holiday visa.

Whilst in Country A you rented an apartment and your employment income was subject to tax in Country A.

You are currently living in rental accommodation in Country B.

You have a one year employment contract in Country B which may be extended for additional one year terms.

You have applied for a one year business (working) visa extension as you are currently on a 30 day visa that you were given on arrival in Country B.

You are currently working for an Australian Government agency Country B.

You have not been back to Australia since your departure.

You do not own any property, have any dependents or receive any income from Australia.

You are travelling indefinitely at the moment and have no immediate plans to return to Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 995-1

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Subsection 995-1 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). A foreign resident is a person who is not a resident of Australia.

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 an Australian resident for income tax purposes.

These tests are:

· the reside 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 resides 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 may still be considered to be an Australian resident for tax purposes if they meet the conditions of one of the other three tests.

In your case you have been residing overseas since some time in the 2009-10 income year, therefore you are not considered to be residing in Australia under this test.

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.

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.

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 left Australia over two years ago.

You were employed in Country A for two years.

You now have an employment contract in Country B for one year with a possible extension for additional one year terms.

You have no immediate plans to return to Australia.

You do not have any property or dependents in Australia.

Therefore, you are considered to have established a permanent or long-term abode outside of Australia.

The 183-day test

This test does not apply to you as it has been identified that your permanent place of abode is outside of Australia.

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 are not considered to be a member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you will not be treated as a resident under this test.

In your case, you are not considered to be a resident of Australia for tax purposes under any of the four tests of residency outlined above.