Edited version of your private ruling

Authorisation Number: 1012493029162

Ruling

Subject: Residency Status

Question and answer:

Are you a resident of Australia for tax purposes?

No.

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

The scheme commenced on:

1 July 2011

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.

Your country of origin is Australia.

You previously lived in Australia in the financial year ended 30 June 201X to live and work in Country X.

You were originally granted a standard 90 entry visa whilst you obtained the documentation to receive a Personal Employment Pass in Country X. It was issued on in the financial year ended 30 June 201X and expires in the financial year ended 30 June 201Y.

Your main purpose for relocating to Country X is predominantly for employment purposes.

You have no return plane tickets or any intention to return to Australia.

Since relocating to Country X you have returned to Australia on a number of occasions for less than 10 days at a time.

You have a lease agreement for a property in Country X that began early November 201X and is for a period of Z years. It is to expire late October 201W. You intend to buy a property when the lease ends.

Your employer has not provided you with any accommodation.

You have acquired numerous assets in Country X

You sold your share (50%) of your only residential property in Australia.

You own no assets in Australia; therefore you receive no income from Australian sources and had no reason to inform any Australian companies that you had become a foreign resident.

You have gained employment in Country X since. The initial contract was for X months, but it is highly likely that you will be offered a long term contract once the initial contract has ended.

You have no employment opportunities waiting for you in Australia.

You do not have any immediate family members overseas or in Australia.

You do not have any social or sporting connections with Australia, you have however, joined a sporting club in Country X.

You have never been an employee of the Commonwealth Government of Australia.

You lodged an Income tax return in Country X for the financial year ending 31 December 201X.

You have been removed from the Australian Electoral roll from in the financial year ended 30 June 201X.

You have cancelled your health insurance policy in Australia and taken up a private health insurance policy in Country X.

You incorrectly wrote 'temporarily departing' on his initial Australian on his initial Australian immigration Outgoing passenger card. After a discussion with an immigration representative, you have on subsequent arrivals and departures written 'non resident'.

You did not have any capital gains tax events as a result of departing Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5 and

Income Tax Assessment Act 1936 Subsection 6(1) .

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 a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia.  However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

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, and

· 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.

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. 3^rd 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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

· whether the person is physically present in that country at some time during the year of income

· the history of the person's residence and movements

· if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits

· if the person is outside the country for part of the relevant income year, the purpose of the absences

· the family and business ties which the person has with the particular country, and

· whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.

Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.

In your case, you are living and working in Country X. The purpose of your relocation is employment. You departed Australia in the financial year ended 30 June 201X. You have no return plane tickets or any intention to return to Australia. You do not have any social or sporting connections with Australia, you have however, joined a sporting club in Country X. You have a lease agreement for a property in Country X that began in the financial year ended 30 June 201V and is for a period of Z years. It is to expire in the financial year ended 30 June 201A. You intend to buy a property when the lease ends. You own no assets in Australia; therefore you receive no income from Australian sources and had no reason to inform any Australian companies that you had become a foreign resident. You have been removed from the Australian Electoral roll from in the financial year ended 30 June 201X.

Your behaviour does not reflect a degree of continuity, routine or habit that is consistent with residing in Australia.

You are not residing in Australia according to the ordinary meaning of the word.

Therefore, you are not a resident of Australia under this test.

The three statutory tests of residency must now be considered.

The domicile test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases.

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.

Your domicile is Australia because you were born in Australia and you are a citizen of Australian citizen. You have made no attempt at giving up your Australian citizenship or taking up citizenship of Country X.

Permanent place of abode

It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case.

The courts have considered a person's 'place of abode' is where they consider 'home'. In R v Hammond (1982) ER 1477, Lord Campbell CJ stated that "a man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression."

A place of abode must exhibit the attributes of a place of residence or a place to live, as contrasted with the overnight, weekly or monthly accommodation of a traveller.

Paragraph 23 of IT 2650 sets out the following factors which are used by the Commissioner in reaching a state of satisfaction as to a taxpayer's permanent place of abode:

(a) the intended and actual length of the taxpayer's stay in the overseas country;

(b) whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time;

(c) whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia;

(d) whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence;

(e) the duration and continuity of the taxpayer's presence in the overseas country; and

(f) the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on.

In relation to the weight to be given to each of the above factors, paragraph 24 of IT 2650 states:

The weight to be given to each factor will vary with the individual circumstances of each particular case and no single factor will be decisive… however… greater weight should be given to factors (c), (e) and (f) than to the remaining factors, though these are still, of course, relevant.

In your case, the Commissioner is satisfied that you will have a permanent place of abode in Country X for the following reasons - your visa in Country X expires in the financial year ended 30 June 201Y and is extendable. You have removed your name from the electoral role. You have indicated on your passenger card that you were arriving and departing Australia as a non-resident. You intend to buy a property when the lease ends. You own no assets in Australia as you sold your share of a residential property before you departed Australia. You have acquired numerous assets in Country X.

As your domicile is Australia and the Commissioner is satisfied that you have a permanent place of abode outside of Australia, you are not a resident of Australia under this test.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual place of abode is outside of Australia and they have no intention of taking up residence here.

In your case, as you are not in Australia for more than 183 days in an income year, you are not a resident of Australia under this test.

The superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds:

· established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or

· established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or

· the spouse or child under 16 of a person covered by either of the above funds.

As you have never been a Commonwealth government employee and are therefore unable to contribute to any of the abovementioned superannuation schemes, you are not a resident of Australia under this test.

Your residency status

As you do not meet any of the above tests, you are not a resident of Australia for tax purposes.

As you are not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income only includes income gained from sources in Australia.