Edited version of your written advice

Authorisation Number: 1012972766084

Date of advice: 18 February 2016

Ruling

Subject: International - residency

Questions and answers

Will you be a non-resident of Australia for taxation purposes, from the date you left Australia?

Yes.

This ruling applies for the following period

Early 2016 to 30 June 2016

1 July 2016 to 30 June 2017

1 July 2017 to 30 June 2018

1 July 2018 to 30 June 2019

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 currently employed.

Your employment is in Country Y.

You work on a rotation schedule, with Australia being your current point of employment departure and arrival.

You own a unit, which was your main residence.

You have no immediate family.

You own an investment property which is leased to a third party tenant and is managed by a real estate agent.

You maintain Australian bank accounts and a credit card which were being used for everyday transactions and the purposes of dealing with expenses relating to the investment property.

You maintain an Australian private health insurance.

You hold a club membership.

You have a superannuation fund but it has been dormant for the past several years.

You have no other significant assets.

You departed Australia to reside in Country X permanently. You have relocated to Country X to enjoy the lifestyle and hope to find a partner.

The date, has been chosen as it will mark your final employment point of departure. You have the ability to change your point of departure and arrival with your employer which has been confirmed to be Country X.

You entered Country X on a Tourist Visa which permits entry for a maximum stay of 30 days. You obtained this Visa for simplicity purposes whilst you are settling in to your new residence. You will be acquiring a Non-immigrant Visa once your return to Country X from your work rotation in Country Y. You intend to retire to Country X and as part of the requirements of attaining a Retirement Visa in Country X, you must first hold a Non-immigrant Visa. You have been advised of your Visa obligations and intentions as a result of making contact with Country X officials upon your relocation to Country X.

You have started the process to acquire a Retirement Visa in Country X.

You will meet the key requirements to obtain a Retirement Visa.

With assistance from Country X officials you will be opening a Country X bank account and will be making the necessary money transfers to satisfy the financial requirements.

The Country X bank account will also be used for your expenses relating to your lifestyle in Country X.

You have consulted with Country X Taxation Officials upon arriving in Country X and are aware of your taxation obligations to Country X and will meet these obligations.

Your immediate overseas destination is Country X where you will reside under an X month renewable agreement in a fully furnished residential house.

You have sought a long term lease on an apartment in Country X. You have made several enquiries and have organised inspection of apartments on arrival in Country X.

Your intention is to purchase new household goods and other items to furnish the apartment.

Your intention is to obtain a Country X driver's licence and to purchase a motor vehicle.

You will to continue to rent out your Australian investment property.

You are seeking an appropriate tenant for your residential home in Australia. All furnishings and any minor assets contained in the house will remain.

You have contacted Medicare and have advised them of your relocation to Country X and your non-residency status. Subsequently you have ceased being eligible for public health care in Australia.

You cancelled your private health insurance upon departure from Australia.

You have removed yourself from the Australian Electoral Roll due to moving to Country X indefinitely.

You will retain the home loan account in Australia for the purposes of managing your investment property expenses. However, you have transferred all of your savings into the Country X bank account.

You intend to maintain your club membership due to its high purchase cost, demand and possible future use.

You intend to visit Australia sporadically in order to inspect your properties and to visit family.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

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.

The first two tests are examined in detail in Taxation Ruling IT 2650: 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 considered to be a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests.

The resides test

The first question to be asked in considering the residency status of a person is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to apply any of the other tests. The person is a resident of Australia for income tax purposes.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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 have left Australia permanently to live and retire in Country X, therefore, you will not be considered to be residing in Australia according to ordinary concepts under this test.

Accordingly, you will not be a resident of Australia under the 'resides test'.

The 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'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. 

From the information that you have provided, you have demonstrated an intention to become a citizen or resident of Country X and it is considered that your intension is to make Country X your home indefinitely. Therefore, it is considered that you have adopted Country X as your domicile of choice.

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 you intend to live for the rest your life.  An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere.

For the period after you depart Australia your circumstances will be following:

• You will be residing in Country X permanently to enjoy the lifestyle and hope to find a partner.

• You have made arrangements with your employer, in Country Y, to fly in, fly out on rotation from Country X.

• You have started the process to acquire a Retirement Visa in Country X.

• With assistance from Country X officials you will be opening a Country X bank account and will be making the necessary money transfers to satisfy the financial requirements.

• You have sought a long term lease on an apartment in Country X. You have made several enquiries and have organised inspection of apartments on arrival in Country X.

• Your intention is to purchase new household goods and other items to furnish the apartment.

• Your intention is to obtain a Country X driver's licence and to purchase a motor vehicle.

• You cancelled your private health insurance in Australia.

• You have removed yourself from the Australian Electoral Roll.

• You have advised Medicare that you have relocated to Country X and subsequently you have ceased being eligible for public health care in Australia.

Based on these facts, it is therefore considered that you will establish a permanent place of abode in Country X.

Accordingly, you will not be a resident of Australian for income tax purposes under the domicile test.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent of abode is outside of Australia and they have no intention of taking up residence here.

You have departed Australia with the intention to reside overseas permanently; you intend to visit Australia sporadically in order to inspect your properties and to visit family. Therefore as you will not be physically in Australia, from the date you departed, for more than 183 days in an income year you will cease to be a resident of Australia for income tax purposes.

Accordingly, you will not be a resident of Australian for income tax purposes under the 183 day test.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.  Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

You are not an employee of the Commonwealth Government of Australia and you are not a contributing member of the PSS.

Therefore, you are not a resident of Australia for income tax purposes under the superannuation test.

Your residency status

Accordingly when you departed Australia you ceased to be a resident of Australia for income tax purposes, under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.