Edited version of your private ruling

Authorisation Number: 1012414806621

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Ruling

Subject: Residency

Question and Answer:

Are you an Australian resident for taxation purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commences on:

1 January 2013

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are an Australian citizen and have always lived in Australia except for a certain period of time you lived overseas

You and your family left Australia in early 20XX to take up residence in country x.

You moved to country x to take up employment contact, this is initially a 3 year secondment. At the conclusion of the 3 years you will either have a further contract in country x, Australia or another location, or alternatively you will be paid out and you will leave the company.

You own a house in Australia, which has been your family's main residence before you moved to country x.

Given the current property market you will not be attempting to sell your house, you will rent it out unfurnished. This arrangement will be assessed periodically to determine whether there is a more appropriate time to sell.

You will maintain a small amount of cash in an Australian bank account, which would be designed to receive rent and pay rental outgoings.

You own a number of motor vehicles these will be sold prior to departure. You will be taking furniture with you.

You and your family will move into permanent accommodation in country x on your arrival.

You are married with dependent children..

Your children will be attending school in x.

You are a member of an Australia superannuation fund.

You are not a member of the PSS or CSS or a spouse of such a person, or a child under 16 of such a person.

You do not intend to spend more than 183 days in each financial year in Australia whilst you are employed and living in country x.

Relevant legislative provisions

Section 6-5 of the Income Tax Assessment Act 1997

Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Are you an Australian resident for tax purposes?

The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is an Australian resident for income tax purposes. These tests are:

1. The resides test

2. The domicile test

3. The 183 day test

4. The superannuation test

The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - Permanent Place of Abode Outside Australia (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 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 satisfy the conditions of one of the three other tests.

1. The resides test

The ordinary meaning of the word reside, according to the dictionary definition, 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 early 2013. As you will not be living in Australia for the period covered in the ruling you are not a resident of Australia under the resides test.

2. 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.

Domicile

Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law.

In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.

In your case, you have advised that you intend to remain living and working in country x for the period of your employment contract. Following the end of your contract you may stay working overseas or return to Australia. You have no intentions to change your domicile.

Permanent place of abode

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.

IT 2650 outlines the elements to be considered when determining whether a person has established a permanent place of abode outside of Australia. The ruling states that all of the circumstances of each case need to be considered and not one factor is determinative.

Factors to be considered include:

a) Intended and actual stay overseas

b) Intention to stay in one country or move between countries

c) Whether a home has been established outside of Australia

d) The duration and continuity of presence overseas

e) The durability of association with Australia

Although you maintain economic ties with Australia through your bank account, superannuation fund and investment property you will be establishing your life in country x through your long term employment contract which includes an option to potentially extend past its current end date. You are accompanied by your spouse and school aged children who will be attending school in country x. You will be living in permanent accommodation in country x. You are considered to have established a permanent place of abode outside of Australia. Therefore you are a non-resident of Australia under the domicile test.

The 183 day test

When a person is present in Australia for 183 days during the year of income the person will be a resident, 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.

You do not satisfy this test as you will not to spend more than 183 days in each financial year in Australia during the period of this ruling.

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 a member of the PSS or 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.

Your resident status

The Commissioner is satisfied that your permanent place of abode is outside Australia. Therefore you are a non-resident of Australia for tax purposes.