Edited version of your written advice

Authorisation Number: 1012767342472

Ruling

Subject: Various

Questions and answers:

1. Are you a non-resident of Australia for income tax purposes from the date of your departure from Australia and therefore not assessable on your foreign sourced income?

Yes.

2. Are you liable for the Medicare levy from the date of your departure from Australia?

No.

3. Will you be liable for any capital gains tax with regards to your mutual fund investments if you apply the deemed disposal rule on your investments in your income tax return?

Decline to rule.

4. Will capital gains tax apply to your property in Australia?

Decline to rule.

This ruling applies for the following period:

Year ending 30 June 2015

The scheme commences on:

1 July 2014`

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 a citizen of country T and a temporary resident of Australia.

You moved to Australia and became a resident of Australia for income tax purposes.

You have a spouse who is also a country T citizen.

Your assets in Australia consist of a home and Australian mutual funds.

You and your spouse left Australia to live and work overseas for an indefinite period.

You have not decided whether you will choose to disregard the gain or loss under CGT event I1 with regards to your CGT assets.

You have not indicated whether you intend to dispose of your residence in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(2)

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

Residency

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the 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.

From the information you have provided you will not be living in Australia after your departure and your domicile will be country T. Neither you nor your spouse, were members of a Commonwealth Government superannuation scheme. Therefore you do not satisfy any of the above tests for residency after departing Australia.

Accordingly from the date of your departure from Australia you ceased to be a resident of Australia for income tax purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of ITAA 1936.

Assessable income

Subsection 6-5(3) of the ITAA 1997, provides that the assessable income of a non-resident taxpayer only includes ordinary income derived directly or indirectly from all Australian sources during the income year and other ordinary income that a provision includes as assessable income on some basis other than having an Australian source.

From the date of your departure from Australia as you ceased to be a resident of Australia for tax purposes all your foreign employment income ceased to be assessable under subsection 6-5(3) of the ITAA 1997.

Medicare levy

Where a taxpayer either becomes a resident or ceases to be an Australian resident during a year of income, a taxpayer's Medicare is calculated on a pro-rata basis according to the number of days that the taxpayer was a resident of Australia for income tax purposes.

In your case, the Medicare levy will apply on a pro rata basis based on the number of days that you were an Australian resident for tax purposes.

Question 3 and 4

The Commissioner has declined to rule.

Subsection 359-35(2) of Schedule 1 to the Taxation Administration Act 1953 (TAA) provides that a private ruling does not have to be given if making the ruling would prejudice or unduly restrict the administration of a taxation law. This includes where the scheme, to which the application relates is not seriously contemplated or hypothetical.

Based on the facts provided by you, the scheme is hypothetical.

You have not indicated which course of action you intend to pursue in terms of your mutual fund investments or indicated any definite plans to sell or otherwise dispose of your property in the near future. Therefore the advice you have requested with regards to these investments is tax planning advice that would depend on unknown facts and future events.

Accordingly, the Commissioner has declined to rule on these questions for the purposes of Division 359 of Schedule 1 to the TAA.