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Ruling

Subject: Residency for tax purposes

Questions and answers

Were you a resident of Australia for taxation purposes for the period you were overseas?

No.

Is the income you earned overseas assessable in Australia?

No.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You went overseas to live and work.

Your spouse went overseas to work.

You had a dependant visa the overseas country.

You intended to be with your family for the duration of their stay overseas.

Due to a natural disaster you returned to Australia earlier than expected.

You lived in rented accommodation overseas.

You worked for an Australian company while you were overseas.

You received jobs, instructions and completed them via e-mail while overseas.

You had no assets overseas and only held one bank account.

You had a home in Australia which was rented out while you were overseas and an investment fund along with a bank account.

You had no social or sporting connections with the overseas country.

You had no social or sporting connections with Australia.

You did not return to Australia for the period you were overseas.

Neither you nor your spouse has ever been a Commonwealth Government employee.

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

To understand your tax situation, you must first work out whether you are an Australian resident for tax purposes. Australian residents are generally taxed on their worldwide income and non-residents are generally taxed only on their Australian-sourced income.

The definition of 'resident' within tax law 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

You do not meet any of the above tests and are not considered a resident of Australia for tax purposes from when you left Australia.

You accompanied your family overseas.

You intended to stay overseas for as long as your family were there.

You rented out your home in Australia for the duration of your stay overseas and you rented accommodation overseas.

The only reason you returned to Australia was due to natural disaster.

The factsheet Residency - what you need to know provides details of the above residency tests and may be obtained from our website www.ato.gov.au.

As you were not a resident of Australia for tax purposes while you were overseas, your assessable income in Australia for that period only includes income sourced in Australia. The salary you earned overseas is therefore not assessable in Australia.