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Ruling

Subject: Residency

Questions and answers:

Are you a resident of Australia until your employer made a final superannuation contribution?

No.

Are you a resident of Australia after your employer made a final superannuation contribution?

No.

This ruling applies for the following periods:

Year ended 30 June 2012.

The scheme commenced on:

1 July 20XX.

Relevant facts:

You left Australia.

Your employer was still paying you superannuation after you moved overseas.

Your final pay was paid after you moved overseas.

You have no definite plans to come back to Australia.

You are living overseas.

You have been living in the same house whilst overseas.

You have full time employment overseas.

You have a permanent place to live overseas.

You do not have any assets in Australia.

You have dual citizenship overseas and in Australia.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 995-1(1).

Income Tax Assessment Act 1936 subsection 6(1).

Reasons for decision

Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 and permanent place of abode test,

· the 183 day test, and

· the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual. If residency is established under the resides test, the remaining three tests do not need to be considered.

If residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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 left Australia in mid 20XX to live and work overseas, you have no definite plans to return to Australia.

Overseas you:

· have a permanent place to live,

· work full time, and

· have an intention to work indefinitely.

Accordingly, you are not a resident of Australia for taxation purposes under this test from the date you left Australia to reside overseas.

The domicile and permanent place of abode test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside 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 acquire a domicile by choice outside of their domicile of origin, a person must have and be able to prove an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person becomes a citizen of a country outside of their domicile of origin.

Taxation Ruling IT 2650 specifies that a person with an Australian domicile who is living outside Australia will retain their Australian domicile if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency' - at the end of a specific period of time for example.

In your case, you have dual citizenship overseas and in Australia.

Although you cannot say when you will return to Australia, we consider that you have retained your Australian domicile while you have been living and working overseas as you still hold Australian citizenship.

As a result, you will be a resident of Australia for taxation purposes under the domicile and permanent place of abode test unless the Commissioner is satisfied your permanent place of abode is outside Australia.

IT 2650 specifies that a permanent place of abode does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives.

IT 2650 also specifies that a period of two or more years is generally considered sufficient to support the establishment of a permanent place of abode outside of Australia and that an intention to return to live in Australia permanently does not prevent a taxpayer setting up a permanent place of abode elsewhere in the meantime.

In your case, we consider you have established a permanent place of abode overseas because:

· You have been living and working overseas since mid 20XX and do not know when you will return to Australia.

· You have a permanent place to live overseas.

· You have no assets left in Australia.

You have retained your Australian domicile since leaving Australia, but have established a permanent place of abode overseas. As a result, you have not been a resident of Australia for taxation purposes under this test since you left Australia to live overseas.

The 183-day test

Where a person is present in Australia for 183 days during an income year, the person will be a resident of Australia for taxation purposes unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

In your case, you have been living and working overseas since mid 20XX. Based on this, and the fact that we consider you have established a permanent place of abode overseas since you left Australia, you are not a resident of Australia for taxation purposes under this test from the time you left Australia.

The superannuation test

Under this test, an individual will be considered a resident of Australia for taxation purposes if:

· they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990,

· they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976, or

· they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS.

In your case, you do not have a spouse, you are over the age of 16, and you are neither a member of the PSS or an eligible employee for the purposes of the CSS.

You were a state government employee and a member of a state government superannuation scheme - this has no bearing on your residency status.

Accordingly, you are not a resident of Australia for taxation purposes under this test.

Conclusion - your residency status

You have not been a resident of Australia for taxation purposes since you left Australia to live overseas in mid 20XX.