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Edited version of your private ruling
Authorisation Number: 1012533583909
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 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commenced on:
1 July 2012
Relevant facts and circumstances
You are a citizen of Australia.
You and your family left to live in country Z on a permanent basis recently.
You have purchased a house in Country Z.
You have moved all your belongings to Country Z.
You have purchased a car in Country Z.
You have joined a gym in Country Z.
You have opened bank accounts in Country Z.
You only intend to return to Australia for short visits during the next three years.
You have closed most of your bank accounts in Australia.
You have rented out your family home.
Your investment properties are being rented out.
You have a Country Z driver's licence.
Neither you nor your spouse are currently or have ever been Commonwealth government employees.
Relevant legislative provisions:
Income Tax Assessment Act 1936 Subsection 6(1)
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 995-1(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
· the superannuation test.
The first two tests are examined in detail in Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia.
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 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 Country Z recently for an indefinite period of time.
As you are not living in Australia anymore you are not residing in Australia according to ordinary concepts.
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.
You are a citizen of Australia and you were born in Australia therefore, your domicile of origin is Australia.
You have not obtained Country Z citizenship therefore you have not changed your domicile.
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.
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 and your family have moved to Country Z on a permanent basis.
You have purchased a home in country Z.
You have taken all your belongings to Country Z.
You have rented out your home in Australia.
You have obtained a Country Z drivers licence.
You do not intend to return to Australia for at least 3 years.
Based on these facts, you have established a permanent place of abode in Country Z.
The 183-day test
You do not intend on being in Australia for 183 days or more in any financial year for the period you are in Country Z.
You are not a resident 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.
Only Commonwealth Government employees are eligible to contribute to the PSS and CSS.
As you and your spouse were not a Commonwealth Government of Australia employee you will not be treated as a resident under this test.
Your residency status
You are not a resident of Australia for taxation purposes under any of the residency test.
You are a non-resident of Australia for taxation purposes from when you left Australia.
Please note:
The Commissioner is not able to rule for any longer than the current financial year plus three future years.
The reason for this is that there may be changes to legislation which may change the outcomes of ruling decisions.