Edited version of your written advice

Authorisation Number: 1051176893230

Date of advice: 12 January 2017

Ruling

Subject: Residency

Question

Are you a resident of Australia for income tax purposes?

Answer

No

This ruling applies for the following period

Year ended 30 June 20ZZ

The scheme commences on

1 July 20YY

Relevant facts and circumstances

You were born in Australia and are an Australian citizen.

Neither you nor your spouse is:

● An eligible employee in the Commonwealth Service Superannuation scheme, or

● A member of the Public Sector Superannuation Scheme

In recent years you have been working for an international company. You have been based in Australia, but make 3 or 4 trips overseas per year for meetings.

You have recently been promoted and have been required to move to Country A permanently as part of the role. Your family (spouse and children) have moved with you.

You signed an on-going local (Country A) employment agreement in late 20YY.

There is no planned end date for the employment agreement in Country A nor are there any clear 'next steps'. It is your intention to remain employed with your current employer and if there are opportunities to relocate elsewhere in the future, you will consider these opportunities based on your family's circumstances at the time.

Your Australian employment has ceased.

Your employment agreement includes the payment of some expenses, that is:

● Flights for you and your family to Country A

● Expenses relating to moving all personal effects to Country A including furniture

● A contribution towards on-going household costs in Country A

● A settlement allowance to enable the purchase of new items required in the new home eg a new television etc

You and your family have signed a two year lease for a rental apartment in Country A. This is the standard period for a family friendly apartment in Country A.

You have moved almost all your personal belongings to Country A, or sold them. A car belonging to your spouse will be stored with friends in Australia. A large formal dining suite will be stored in Australia as there is not enough room in your Country A apartment for it.

Your children have been enrolled in school in Country A. They were not enrolled in school in Australia.

You have established a bank account in Country A in to which your salary will be paid in Country A currency.

You will come back to Australia only as required by your employment. You expect that this will only be once or twice a year for meetings. Each visit will be for no more than a week.

Australia is one of more than 10 territories that you look after as part of your new role. You will also travel to other territories on a regular basis.

You have no intention of travelling to Australia other than for work. You do not intend to visit parents or siblings.

You intend that any future family holidays will be in or around Country A - not in Australia.

You are the joint owner of several properties in Australia. One of these was the family home until recently; the others have always been rental properties.

Your former family home will be rented out and will be part of the investment portfolio. There is no intention to move back into the home at any stage.

You and your spouse may purchase one or more investment properties in Country A once you have settled in and gained an understanding of the market.

You have retained one jointly held bank account in Australia. Rental incomes are paid into the account and mortgage payments and other holding expenses are paid out of the account.

You have an Australian visa card in joint names which is used to pay some of the rental property expenses (eg insurance). The card will be kept for the moment to allow these on-going expenses to be paid and so that your spouse can use the card when they visits Australia.

You have already arranged a Country A visa card to pay for family expenses in Country A.

Your children each have a savings account in Australia which contains money gifted from relatives.

Your spouse has been a sole trader in Australia for many years. They will continue to operate their Australian business. However, they have some overseas projects which they may wish to pursue now that the family is physically based in Country A.

Your spouse will return to Australia on an “as needs” basis for their business. They will return to Australia every 6 weeks or so for business purposes. They will stay in hotels or with friends during these visits and will travel alone (without you and the children).

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 (and permanent place of abode) test,

● the 183 day test, and

● the superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia. The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes.

An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes.

Based on the facts of your case it is clear that you will not satisfy any of the above tests for residency. Significant in reaching this conclusion is that you were accompanied by your spouse and family and have an on-going employment contract. On arrival in Country A you established long term rental accommodation with the intention remaining for a significant period of time. Further neither you nor spouse has ever been employed by the Commonwealth Government of Australia.

Your residency status

As you have not satisfied any of the tests for residency you are not a resident of Australia under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997 and therefore not a resident of Australia for income tax purposes.