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Ruling

Subject: Residency status

Question and answer:

Were you a resident of Australia for income tax purposes from XX YY 20XX to ZZ WW 20XX?

Yes.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commenced on:

On or after 1 January 2012

Relevant facts

You were born in Australia are a citizen of Australia.

You are separated from your spouse and have dependants under the age of 16.

You secured a permanent employment position in country X.

You left Australia with the intension of living and working in country X permanently.

Upon arrival in country X you set up a permanent residence and transported all your personal belongings with you.

The conditions of your employment are such that you are required to work on a number weeks on followed by a number of weeks off rotation.

After working on your first rotation you returned to Australia for a number of weeks to visit your dependants and family. While in Australia you notified a government agency that you were no longer a resident of Australia for income purposes. When you endeavoured to return to country X you discovered that you had probation orders placed on your passport that prevented you from leaving Australia. The conditions of the probation order were such that you were required to pay an assessed amount to the government agency. You paid this amount and returned to country X to begin a further another shift.

When you returned to Australia you stayed in your Australian family home, which is also being occupied by family members.

When you returned to country X you were issued with a specified period residency visa.

After completing your next rotation you returned to your home in Australia to visit your dependents and family, however once again you had probation orders placed on your passport preventing you from leaving Australia, instigated by a government agency.

Due to ongoing issues with the government agency with regards to removing the probation on your passport, you have had to find employment in Australia. Once you resolve the probation issues you intend to return to country X.

You do not have any social or sporting ties in Australia.

Your overseas social and sporting ties consist of community sporting and other hobbies.

The assets that you hold in Australia consist of your home and a bank account which is used to pay your mortgage and transfer child wealth fare payments.

The assets that you hold overseas consist of:

· household furniture;

· clothes;

· tools;

· personal documents; and

· electric items (e.g. tv, stero etc.).

These items remain in country X when you return to Australia during your breaks from your country X employment.

The income that you derive in country X is used in part to pay your child commitments and service your Australian mortgage.

You have never been an employee of the Commonwealth Government of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997, Subsection 995-1(1).

Income Tax Assessment Act 1936, 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

· the superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650: Residency - Permanent Place Of Abode Outside Australia.

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 a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests.

The resides test

The first question to be asked in considering the residency status of a person is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to apply any of the other tests. The person is a resident of Australia for income tax purposes.

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'.

In your case, you left Australia to live and work in country X. The nature of your employment is such that you work for a number of weeks followed by having a number of weeks off. After completing your rotation on, you returned to your home in Australia to visit your dependants and family for a period of over three weeks. These movements are not such that it could not be said that you are dwelling permanently or for a considerable period of time in country X.

In addition, as you returned to your home in Australia after you completed your first rotation it is not considered that you have established a settled or usual place of abode in country X for this period. Based on these facts it is considered that you do not reside in country X for the period included in this ruling and therefore continued to reside in Australia.

Accordingly, you continue to be a resident of Australia under the 'resides 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.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.  From the information that you have provided, you have not demonstrated an intention to become a citizen or resident of country X and have remained a citizen of Australia. Therefore it is considered your Australian domicile has remained unchanged.

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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

For the period included in this ruling your circumstances were the following:

· you left Australia to live and work in country X permanently;

· the nature of your employment conditions are such that you are required to work a number weeks on followed by a number of weeks off;

· you although your intention was to live and work in country X permanently during your first break from employment you returned to your home in Australia to visit your dependants and family;

· you have maintained your family home in Australia, which is being occupied by family members;

· you have a number of dependants who are all under the age of 16, who have remained in Australia;

· you have maintained your Australian bank accounts; and

· the income that you derive in Indonesia is used in part to pay you Australian mortgage.

Based on these facts, your pattern of behaviour is not consistent with establishing a permanent place of abode outside of Australia. Particularly given that after you completed your first shift on, you returned to your home in Australia to visit your dependants and other family members. In addition the income that you derive in country X is used to support your children in Australia as well as service your Australian mortgage. This is also not consistent with establishing a permanent place of abode overseas.

Therefore, for the period included in this ruling you remain a resident of Australia for income tax purposes under the domicile test.

As it has been established that you are a resident of Australia under both the resides test and the domicile test, for the period included in this ruling you remain a resident of Australia for income tax purposes.

Accordingly you are a resident of Australia from the period included in this ruling, under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.