Edited version of your private ruling

Authorisation Number: 1012521595188

Ruling

Subject: Are you a resident of Australia

Question and answer

Are you a resident of Australia for tax purposes?

Yes

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commenced on:

1 July 2012

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 were born in and are a citizen of Australia.

You have not been granted permanent residency of any other country.

You have not lodged tax returns in any other country.

Your country of origin is Australia.

In 20XX you departed Australia for country X.

You are employed by an Australian company.

You are on a temporary worker Visa in country X of two years duration.

The total length of your intended stay in country X is two years.

You and your spouse rent a flat in country X.

Your Australian assets include the a property, a car, long term savings and investments, shares, furniture, clothes, tools and personal items.

You receive income from Australian sources.

Your spouse and child accompanied you overseas.

Most of your family are in Australia.

Many of your friends live in Australia.

You have made friends in country X.

You and your spouse were not Commonwealth Government of Australia employees for superannuation purposes.

You have not advised the Australian Electoral Office to have your name removed from the electoral roll.

You have not advised any Australian financial institutions with whom you have investments, that you are a foreign resident.

You have not advised any Australian companies with whom you have investments that you are a foreign resident.

You have not advised Medicare or your health insurance provider to have your name removed from the records.

You believe that you stated on the Australian Immigration Outgoing passenger card that the reason you were going overseas was for work or employment.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for 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 departed Australia to live in country X in 20XX and you intend to return to Australia in 20YY. You do not intend to make your home permanently in country X. You maintain a residence in Australia. You have family and friends in Australia. You are employed by an Australian company. You are paid into an Australian bank account. You do not earn any income from sources outside of Australia. Your visa does not allow you to remain permanently in country X. Your ties to Australia are closer than your ties to country X.

Based on these facts, you are still 'residing' in Australia under the ordinary meaning of the word. Therefore you are a resident of Australia under the resides test.

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

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

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

In your case, you were born in Australia; therefore, your domicile of origin is Australia. You do not have permanent residency or citizenship of country X. Therefore, you have not shown an intention to make country X or any other country your home indefinitely and your domicile remains Australia.

As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia.

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:

· You left Australia to travel to country X in 20XX.

· You were born in Australia; therefore your domicile of origin is Australia.

· You maintain a residence in Australia, although it is currently being rented out.

· You are employed by an Australian company.

· You are paid into an Australian bank account.

· You have not been granted permanent residency by any other country.

· Your visa does not allow you to stay permanently in country X.

· You have not lodged tax returns in any other country.

· You have no intention to make country X your home indefinitely.

· You have family in Australia.

· You are living in a rented flat in country X with your spouse and child.

Based on these facts the Commissioner is not satisfied that you had established a permanent place of abode outside of Australia.

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

Your residency status

As it has been established that you are a resident of Australia under both the resides test and the 'domicile test' there is no need to consider the remaining two tests.

As you are a resident of Australian for tax purposes, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia.