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Edited version of your private ruling
Authorisation Number: 1012438475242
Ruling
Subject: Residency
Question
Were you a resident of Australia for taxation purposes for the period you were in another overseas country?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You are a citizen of Australia and an overseas country
You were born in Australia.
You went to another overseas country to live and work for a number of months.
You had a full-time work contract.
You intended to live and work the other overseas country on a permanent basis.
You rented an apartment for the duration of your stay in the other overseas country.
You furnished the apartment at your own expense purchasing all household items.
You had a bank account in the other overseas country.
You owned a home in Australia and rented this out while you were overseas.
Your partner accompanied you to the other overseas country as they had a job.
You returned to Australia as your partner was contacted by an employer to apply for a job and they were successful with the position.
You did not return to Australia for any period while you were in the other overseas country.
Neither you nor your spouse are currently or have ever been Commonwealth Government employees.
You are over the age of 16.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1).
Income Tax Assessment Act 1997 Subsection 995-1(1).
Reasons for decision
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 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.
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 meet the conditions of one of the other three tests.
The resides test
The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.
The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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 to live and work in another overseas country.
Your partner accompanied you to another overseas country.
You lived in the one rental property for the duration of your stay in another overseas country.
You did not return to Australia for any period during your stay in another overseas country.
You were not residing in Australia according to ordinary concepts for the period you were in another overseas country as you were not living and working in Australia.
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.
Your domicile of origin is 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. 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.
You went to another overseas country to live and work.
You intended to live and work overseas on a permanent basis as you had a work contract and you intended to extend the contract.
You lived in the same rental property for the whole of your stay in another overseas country.
Your partner accompanied you to another overseas country.
You returned to Australia for your partner's work purposes.
Based on these facts, it is therefore considered that you established a permanent place of abode overseas for the period you were in another overseas country.
The 183-day test
When a person is present in Australia for 183 days or more 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 did not make any trips back to Australia during your time in another overseas country so you will not be treated as a resident 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.
Only Commonwealth Government employees are eligible to contribute to the PSS and CSS.
As you and your spouse are over the age of 16 and were not Commonwealth Government of Australia employees you will not be a resident under this test.
Your residency status
You were not a resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period you were in another overseas country. Therefore, you were not considered to be an Australian resident for the period.