Edited version of private advice

Authorisation Number: 1012640075167

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for taxation purposes?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts and circumstances

Your country of origin is Country X and you are a Country X citizen.

You live in Country X on a permanent basis and you have not been granted permanent residency by any other country.

You are employed full-time by an Australian private company.

You were contracted to work full-time and you have been employed in this role at this location for a number of years.

You are employed on shipping exclusively between the Australian mainland and an Australian island. You are always in Australian territory.

Your employment is on a fly-in-fly-out basis. The work arrangements are a set amount of days on followed by the same amount of days off.

Your days off are generally spent with your family in Country X.

You do not hold any Australian assets other than superannuation paid by your employer.

You were not present in Australia for over 183 days during the relevant financial year.

You would eventually like to make Australia your home as your spouse is Australian.

Your employer provides shared cabin accommodation aboard the vessel.

You have your family, a house and two vehicles in Country X.

Your family did not accompany you to Australia.

You do not have any social or sporting connections with Australia.

You have not lodged tax returns in Country X since you commenced working for your current employer.

On the Australian Immigration outgoing passenger card you indicated the reason for going overseas was for work.

Neither you nor your spouse have ever been Commonwealth government employees.

Your arguments and references

Taxation Ruling 98/17 Income tax: residency status of individuals entering Australia states that while the length of time a person is present in Australia is not determinative (although it is a factor), their behaviour may indicate a continuity, routine or habit consistent with someone who is residing in Australia. You believe that you are an Australian resident for tax purposes as you have established a continuity, routine or habit consistent with someone who resides in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 6(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 contains four tests which will help us ascertain whether you were a resident of Australia for income tax purposes for the period you were living and working aboard a vessel in Australian territorial waters. These tests are:

(i)   the residence according to ordinary concepts test;

(ii)  the domicile/permanent place of abode test;

(iii)   the 183 days/usual place of abode test; and

(iv)   the Commonwealth superannuation test.

You need only fall within one test to be a resident and must fall outside all four tests to be a foreign resident. The main test for deciding your residency status is whether you reside in Australia according to the ordinary meaning of the word resides. 

The residence according to ordinary concepts test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd edition, 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'.

Domicile and permanent place of abode test

Your domicile is the place that is considered by law to be your permanent home. You may in fact have no fixed place of abode but the law requires you to have a domicile.

If you have your domicile in Australia you will be an Australian resident unless the Commissioner is satisfied you have permanent place of abode outside of Australia.

There are three types of domicile:

• domicile of origin;

• domicile of choice; and

• domicile by operation of law.

You acquire your domicile of origin at birth and you retain that domicile unless you acquire a domicile of choice by choosing to permanently migrate to another country.

An example of domicile by operation of law would have been a child's domicile is changed when the parents' domicile is change. Since 1982 however, the common law relating to domicile has been modified in Australia by the Domicile Act with the effect that domicile by operation of law has been virtually eliminated for the purposes of the Australian income tax law.

The determining factors with regard to your domicile are:

• your country of origin is Country X and you are a citizen of Country X;

• you live in Country X on a permanent basis;

• you have not been granted permanent residency by any other country;

• you have no assets in Australia;

• you do not have any immediate plans to live in Australia although you would eventually like to make Australia your home as your spouse is Australian;

You do not have an Australian domicile and you have a permanent place of abode in Country X.

You are not a resident of Australia under the domicile and permanent place of abode test.

The 183 days/usual place of abode test

Under this test you will be a resident of Australia if you are actually present in Australia for a total period of more than half the year of income, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you have no intention to take up residence here.

The test applies in relation to the relevant income year rather than a calendar year. For example an individual who is in Australia from February to November would not be treated, under the 183-day test alone, as a resident of Australia in either income year (in which the February-November period falls) since he or she would not be in Australia for more than half of either year.

The person's presence in Australia need not be continuous for these purposes; all the days the person is present in Australia during the income year will be counted.

As you have pointed out Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia provides the Commissioner's interpretation on the residency status of individuals entering Australia.

The ruling explains that six months or 183 days is considered sufficient when deciding an individual's behaviour is consistent with residing here. The ruling also states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here. To this end, the following factors are useful in determining the quality and character of an individual's behaviour:

• intention or purpose of presence

• family and business/employment ties

• maintenance and location of assets

• social and living arrangements

Your presence in Australia was restricted to living aboard a vessel while working. You were employed on this vessel exclusively between the Australian mainland and an Australian island. You do not maintain or hold assets in Australia; your home and assets are in Country X. You do not have any social connections with Australia.

Whilst your living arrangements may be consistent with those of a resident, you have no definite plans to live in Australia permanently. On your days off you returned to your home and family in Country X.

Usual place of abode

Generally, a person's 'usual place of abode' is the place routinely used by them when physically present in a particular country. The place of abode need not be fixed, but must exhibit the attributes of a place of residence or a place to live, as against overnight, weekly or monthly accommodation of a traveller.

While you are in Australia you live in employer-provided shared accommodation aboard the vessel on which you are working. There is no requirement for you to seek out and maintain a more permanent living arrangement of your own, such as signing a lease for rental accommodation.

The Commissioner considers that your usual place of abode is outside Australia.

You are not a resident of Australia under this test.

The superannuation test

Under the superannuation test you will be an Australian resident if you are eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or you are the spouse or child under 16 of such a person.

Neither you nor your spouse are members of the relevant Superannuation Schemes nor do either of you qualify as an eligible employee for the purposes of the Superannuation Act 1976. In addition, you are over 16 years of age. Accordingly, you are not an Australian resident under this test.

Conclusion

You are not an Australian resident for income tax purposes for the year ended 30 June 2013.