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Edited version of your private ruling
Authorisation Number: 1012445319104
Ruling
Subject: Residency
Question
Are you a resident of Australia for tax purposes from late 2012 to 30 June 2013?
No.
This ruling applies for the following periods
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
You left Australia in late 20XX to live in country A
You entered country A on an employment visa.
Australia is your country of origin.
You are working in country A on a permanent full-time contract which began in late 20XX.
It is your intention to live indefinitely in country A.
You do not own a property in Australia.
In Australia you have cash at bank and minor personal items.
Your family has not accompanied you to country B, but your fiancé will join you after you marry in late 20YY. You will return to country A shortly after your wedding to live and work there permanently.
The contract is expected to last 5 years or more and can be extended.
You have never been a Commonwealth Government of Australia employee.
You are over 16 years of age.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1).
Income Tax Assessment Act 1997 Subsection 6-5(2).
Reasons for decision
Residency and assessability of income
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 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.
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 are residing in country A as evidenced by:
• living in long term rental accommodation
• working full time
• your intention to live and work in country A for at least three years, and
• you will only return to Australia to get married and will return to country A shortly after that with your future bride.
Therefore, you were not residing in Australia from late 20XX.
The domicile test
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.
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 show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country.
Australia is your country of origin. You obtained an employment visa for country A and are employed under a long term contract. We consider your domicile has not changed as you have not taken steps to apply for country A citizenship or obtain a permanent resident's visa in country A.
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.
In your case, you moved to country A for the purpose of working and living there on a long term basis. You live in rental accommodation and have taken up a two year lease. The Commissioner is satisfied that you have a permanent place of abode outside of Australia there.
In your case the Commissioner is satisfied that you have a permanent place of abode outside Australia. So you are not a resident under this test.
The 183-day test
Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, that is 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia.
As you were present in Australia for less than 183 days in the 2012-13 financial year, you are not a resident for tax purposes under this test.
The superannuation test
An individual is still 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. To be eligible to contribute you must be or have been a Commonwealth Government employee
You will not be a resident under this test as you have not worked for the Commonwealth Government of Australia and so cannot be a member of the CSS or PSS. Further, you are over 16 years old.