| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012476884510
Ruling
Subject: Residency
Question and answer:
Are you a resident of Australia for taxation purposes?
No.
This ruling applies for the following periods:
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You were born in Australia and you are a citizen of Australia.
You and your family went overseas a number of years ago.
You had an employment visa. Your spouse had a dependant's visa for the overseas country.
You intended to go for an indefinite period of time.
You had a work contract with your employer.
Your position was made redundant.
You are returning to Australia to live.
Your children were enrolled in school overseas.
You rented a property overseas.
You hired domestic help overseas.
You purchased a car overseas.
You rented out your home in Australia.
You removed your name from the electoral roll.
You suspended your medical cover in Australia.
You sold your car in Australia.
You returned to Australia for some short periods totalling less than 183 days in each income year.
It was your intention not to return to Australia.
Neither you nor your spouse are currently or have ever been Commonwealth Government employees.
You are more than 16 years of age.
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 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 and your family went to an overseas country indefinitely to live and work.
As you were not living and working in Australia while you were in the overseas country you were not residing in Australia according to ordinary concepts.
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.
You are a citizen of Australia and you were born in Australia therefore, your domicile of origin is Australia.
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.
Although you intended to live in the overseas country on a permanent basis your visa was not permanent and therefore you have not changed your domicile.
IThe 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 and your family are living in rented accommodation in the overseas country. You hired domestic help for the house and rented your home out in Australia.
Based on these facts, you established a permanent place of abode in the overseas country for the period you were overseas.
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 were not present in Australia for 183 days or more during any financial year you were in the overseas country.
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 are over 16 years of age, and you and your spouse have not ever been Commonwealth Government of Australia employees you will not be treated as 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 the overseas country. Therefore, you were not considered to be an Australian resident for the period you were living in the overseas country.