Edited version of your private ruling

Authorisation Number: 1012438085028

Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for tax purposes for the year ended 30 June 2010 and 30 June 2011?

No.

This ruling applies for the following periods:

Year ending 30 June 2010

Year ended 30 June 2011

The scheme commences on:

1 July 2009.

Relevant facts and circumstances

You are a citizen of country x and you are currently living there.

You have a permanent employment contract in country x.

You were employed in country x during the 2009-10 and 2010-11 financial years.

You are a permanent resident of Australia with a skilled migrant visa.

Your spouse and children live in Australia.

You have never actually lived in Australia and only visit during your holidays.

During the 2009-10 and 2010-11 financial years you travelled to Australia for holidays, you were not in Australia for more than 3 months in each financial year.

Your family visited you in country x during school holidays.

You earned interest on bank deposits of less than $1,000 in both the 2009-10 and 2010-11 financial years.

Your salary is paid into a country x bank account.

You and your spouse own a house in Australia.

You have bank accounts in Australia.

Relevant legislative provisions

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

Section 6-5 of the Income Tax Assessment Act 1997

Reasons for decision

Residency

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.

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.

As you were living and working in country x and you were only physically present in Australia during your work holidays you are not considered to have been residing in Australia.

 2. The domicile test

If a person's domicile is in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

Domicile

If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

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.  Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia provides the Commissioner's view on it is considered that a person has established a permanent place of abode and at paragraph 15 defines permanent place of abode as:

The taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayers presence, the duration of his presence and the durability of his association with the particular place.

You still held your country x citizenship during the 2009-10 and 2010-11 financial years. You lived in country x with your relative. Although you were and still are a permanent resident of Australia and hold a skilled migrant visa you have at no stage lived in Australia with your spouse and children. You only entered Australia to visit your family during your work holidays.

Your domicile remains in country x where you work and live.

Although you have ties with Australia through your family and having purchased a house here you have never lived in the house with your family. You have a permanent place of abode overseas in country x where you live with your relative.

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 did not spent 183 in Australia in any financial year, you spent no more than 3 months in each year financial year holidaying in Australia during your work holidays.

You are not a resident of Australia under this test.

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.

Neither you nor you spouse have ever been Commonwealth Government employees and you are not under the age of 16. Therefore, you are not a resident under this test.

Your residency status

As you do not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a non resident of Australia for the 2009-10 and 2010-11 financial years.