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Edited version of your private ruling
Authorisation Number: 1012604967828
Ruling
Subject: Residency - Leaving Australia
Question and answer:
Are you a resident of Australia for tax purposes after a date?
No
This ruling applies for the following period:
Year ended 30 June 2014.
The scheme commences on
1 July 2013.
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 Australia. You are an Australian citizen.
You will start work in Country A on a date.
You are working in Country A on a visa.
This is reviewed every couple of years.
You are employed in Country A. Your contract is reviewed after a couple of years which you intend to apply for an extension for.
You have no plans to return to Australia permanently.
You will return to Australia to visit family and friends for a couple of weeks each year.
Your family will not accompany you to Country A. You do not have a spouse.
You have a property in Australia that you are renting out, and an Australian bank account to service the related mortgage.
You are currently living in shared accommodation in Country A in an apartment which you organised yourself. The property was largely unfurnished.
You have a bank account, salary and wage and superannuation in Country A.
You are not a member of the Australian Commonwealth Public Service and are not eligible to contribute to the CSS or PSS Superannuation Schemes.
You are over 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 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 resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.
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'.
In considering the definition of 'reside', the courts have stated that the word 'reside' should be given the widest meaning.
The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant:
(i) Physical presence in Australia
(ii) Nationality
(iii) History of residence and movements
(iv) Habits and "mode of life"
(v) Frequency, regularity and duration of visits to Australia
(vi) Purpose of visits to or absences from Australia
(vii) Family and business ties to different countries
(viii) Maintenance of Place of abode.
It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.
(i) Physical presence in Australia
A person does not necessarily cease to be a resident because he or she is physically absent from Australia.
In Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249):
Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.
You have been employed in Country A since a date. You do not intend to return to Australia permanently.
(iii) History of residence and movements
You have lived in Australia prior to leaving for Country A.
You have not returned to Australia.
(iv) Habits and "mode of life"
You have commenced working in Country A. You are living in shared accommodation which you organised yourself. The property was largely unfurnished when you moved in.
(v) Frequency, regularity and duration of visits to Australia
Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country.
You have not returned to Australia during the period you have worked in Country A. You will return for a couple of weeks annually to visit family and friends.
(vi) Purpose of visits to or absences from Australia
The purpose of your absence from Australia is to work in Country A on an indefinite basis. You do not intend to return to Australia.
You have not returned to Australia during your period of employment overseas. You will return for a couple of weeks annually to visit family and friends.
(vii) Family and business ties to Australia and the overseas country
Family
You will be living on your own in Country A. You are single. No member of your family will be accompanying you to Country A.
Business or economic ties
You do not have any business ties in Australia. You do not intend to return to Australia.
Assets
You have a house which you are renting out in Australia. You have a bank account and superannuation in Country A.
Maintenance of Place of abode in Australia
You own a property in Australia which you are renting out. Accordingly, as this property is not available for you to live in, it is not considered that you are maintaining a place of abode in Australia.
Summary
As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning.
There are various factors outlined above which indicate that you will cease to be a resident of Australia. Specifically;
• you are living in a rented apartment in Country A;
• you do not have a spouse in Australia;
• you have a work contract in Country A for a couple of years which you intend to extend indefinitely;
• you have a couple of year visa in Country A which you intend to extend indefinitely;
• you are renting out your property in Australia;
• you do not intend to return to Australia (except for short visits).
Based on a consideration of all of the factors outlined above, you will not maintain a continuity of association with Australia while you are overseas. Therefore, you will be not be residing in Australia in accordance with the ordinary meaning of the word.
You will not be a resident under the resides test of residency for the income tax year.
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.
A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may also adopt a domicile of choice. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country such as when you become a citizen of a new country or apply for permanent residency in a new country.
Your domicile of origin is Australia as you were born in Australia. You have not applied for permanent residency or citizenship in another country so your domicile remains unchanged.
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.
You are renting accommodation in Country A, which you organised yourself and was largely unfurnished when you moved in. You have established a permanent place of abode there. Your domicile is Australia, but the Commissioner is satisfied that you have established a permanent place of abode outside Australia, so you are not a resident under this test.
The 183-day test
Where 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.
As you will not be present in Australia from a date, you do not satisfy this test as you will be here for less than 183 days in the income period from a date.
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. Generally this would only be available to a permanent or temporary employee of the Australian Public Service (APS).
As you are not nor have been a Commonwealth Government employee and are over 16 years of age, you are not considered to be a resident of Australia under the superannuation test.
Conclusion.
As you have not met any of the tests of residency above, you are not a resident of Australia for tax purposes from a date.