Edited version of your written advice

Authorisation Number: 1012922867303

Date of advice: 10 December 2015

Ruling

Subject: Residency

Question and answer

Were you a resident of Australia for taxation purpose for the period you were working overseas?

No.

Is your pension received from your overseas employer assessable in Australia?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2002

Year ending 30 June 2003

Year ended 30 June 2004

Year ended 30 June 2005

Year ended 30 June 2006

Year ended 30 June 2007

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commenced on:

1 April 2002.

Relevant facts and circumstances

You were born in Australia.

You are a citizen of Australia.

You are not a permanent resident of any other country.

You and your spouse went overseas for work purposes a number of years ago.

You were employed by an International organisation.

You worked in a number of countries for the organisation.

Your visas did not allow you to stay permanently in any of the countries you worked.

You took your clothes and pet overseas with you.

Your employer provided the majority of your accommodation overseas.

You did not pay tax on your income while working for the organisation.

You received dividends from shares and rental income while overseas.

You purchased a property in Australia which your spouse's parent lives in rent free.

You purchased an apartment with the intention on living in the apartment when you returned to Australia. The apartment was rented out for a number of months before you returned to Australia.

You purchased a property in Country Y. The property is in your name. You are not able to own land in Country Y so the land is in a nominee's name.

The property remains vacant in Country Y when you are not there.

You returned to Australia to visit family and friends while you were overseas.

You did not spend more than 183 days in any financial year in Australia while you were working overseas.

You and your spouse are not eligible to contribute to the relevant commonwealth super funds.

You received a pension when you ceased your work with the organisation.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Subsection 995-1(1).

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.

The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:

• resides test

• domicile and permanent place of abode test

• 183 day test and

• Commonwealth superannuation fund test.

The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides.  If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

The resides (ordinary concepts) test

The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word 'resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test.

Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test:

(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.

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

You and your spouse went overseas for work purposes a number of years ago.

You have returned to Australia.

You worked in a number of countries for the organisation.

You returned to Australia for short periods to visit family and friends during the period you were overseas.

Based on the facts above you were not residing in Australia according to ordinary concepts for the period you were overseas.

The domicile test

If a person's domicile is Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able 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.

Your domicile of origin is Australia as you are not a permanent resident of any other country and you are not a citizen of any other country.

The Commissioner is satisfied that you had a permanent place of abode outside Australia for the following reasons:

• You worked for an overseas organisation in a number of countries

• Your spouse accompanied you overseas

• You rented accommodation in each of the countries overseas.

You are not a resident under this test.

The 183-day test

Where a person is present in Australia for 183 days 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.

You were not in Australia for more than 183 days in any financial year.

You are not a resident under this test.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.

You and your spouse are not eligible to contribute to the relevant Commonwealth super fund.

You are not a resident under this test.

Your residency status

You were not a resident of Australia for taxation purposes for the period you were working overseas.

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident will include ordinary income derived from all sources, whether in or out of Australia, during the income year.

However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.

Section 6-20 of the ITAA 1997 provides that an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law.

The International Organisations (Privileges and Immunities) Act 1963 (IO(P+I)A) is a Commonwealth law under which an international organisation, and persons engaged by it, may be accorded certain privileges and immunities including an exemption from tax.

The Commissioners guidelines as to the assess ability of remuneration derived from International Organisations are dealt with in Taxation Ruling TR 92/14.

The organisation is not listed as a prescribed organisation eligible for exemption under the IO (P+I)A).

Therefore the pension you received from the organisation is assessable in Australia under section 6-5 of the ITAA 1997.