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Edited version of your written advice
Authorisation Number: 1012994786540
Date of advice: 12 April 2016
Ruling
Subject: International - Residency
Question and answer:
Are you a resident of Australia for income tax purposes for the period you were in Country X.
No.
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commences on:
1 July 20XX
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 disposed of your motor vehicle and most other assets before leaving for Country X only taking personal effects with you.
You left Australia for Country X in 20XX.
You travelled on a visa sponsored by your employer and a second passport.
Your spouse accompanied you.
You spent a short amount of time in employer provided accommodation before moving into a rental property on a long term lease.
Early into your employment in Country X you formed the intention to stay indefinitely.
To facilitate remaining in Country X you took employment with another employer on a fix term contract.
Your Australian residence was tenanted on the day you left Australia. This is the only asset you kept in Australia apart from bank accounts and small share portfolio.
You lodged personal tax returns in Country X as a resident of Country X.
You did not return to Australia during the period you were in Country X.
You returned to Australia permanently in 20YY because of an unexpected family event.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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. The tests are:
• the resides test,
• the domicile test,
• the 183 day test, and
• the superannuation test.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
The resides test
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'.
Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:
• whether the person is physically present in that country at some time during the year of income
• the history of the person's residence and movements
• if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits
• if the person is outside the country for part of the relevant income year, the purpose of the absences
• the family and business ties which the person has with the particular country, and
• whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.
Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.
• You moved to Country X with your spouse to pursue employment with Bloomberg.
• You spent all of your time in Country X once arriving there during the relevant periods.
• Whilst you owned and maintained a property in Australia the property was being tenanted during the relevant periods.
• You intended to return to Australia initially but developed an intention to stay in Country X permanently soon after arrival.
• You entered into long term rental arrangements during the relevant periods.
Therefore, you do not meet the requirements of the resides test and were not a resident for tax purposes.
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 to 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.
You made a permanent move from Australia to live in Country X and because your second passport allows you to stay there on a permanent basis it is accepted that you appear to have adopted Country X as your domicile of choice. This is evident in the fact that you moved to Country X with your spouse and kept a minimal amount of connections with Australia. You took personal effects with you to Country X and disposed of other assets before leaving Australia.
Additionally, the Commissioner is satisfied that you have a permanent place of abode outside Australia.
Therefore, you do not meet the requirements of the domicile test and were not a resident for tax purposes.
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 place of abode is outside of Australia and they have no intention of taking up residence here.
You were not in Australia for 183 days or more in either the relevant income years.
Therefore, you were not 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 were not a resident of Australia for income tax purposes under the superannuation test.
Your residency status
Accordingly for the relevant years you are not considered a resident of Australia for the purpose of income tax as you do not meet any of the residency test requirements outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA1997.