Edited version of private advice

Authorisation Number: 1051573897118

Date of advice: 25 September 2019

Ruling

Subject: Residency and foreign source income

Question 1

Are you a resident of Australia for income tax purposes?

Answer

No.

Having considered your circumstances as a whole and the residency tests, it is accepted that you are not a resident of Australia for income tax purposes. Further information on residency can be found by searching 'QC 33232' on ato.gov.au

Question 2

Is the income that you will earn whilst carrying out the duties of your work for an overseas employer in Country A assessable in Australia?

Answer

No.

As you are not a resident of Australia, according to section 6-5 of the Income Tax Assessment Act 1997, your assessable income only includes income gained from sources in Australia.

As such, your foreign income derived in Country A whilst you are a non-resident of Australia is not assessable income.

This ruling applies for the following periods:

Year ending 30 June 2020

Year ending 30 June 2021

Year ending 30 June 2022

The scheme commenced on:

1 July 2019

Relevant facts and circumstances

General

You were born in Australia and you are an Australian citizen.

You have been offered a full-time job in Country A.

You intend on departing Australia towards the end of 2019 and accepting the offer and commencing the position in Country A shortly after. As such you intend on living and working in Country A for at least three years.

The employment offer is for three years, with annual reviews and the possibility of an extension beyond the third year.

Your employment package includes family accommodation plus other living allowances for the duration.

You will potentially be returning to Australia once or twice a year for brief visits if required, however apart from that you will be living and working in Country A on a permanent basis.

You have not been granted permanent residency in Country A.

You have been granted a working visa (supplied by your overseas employer) which will let you live and work in Country A which is renewable annually.

You intend on returning to Australia between late 2022 and late 2023.

You will be informing the Australian Electoral Commission and Medicare that you are departing Australia.

When completing incoming and outgoing passenger cards, you will declare your status as a non-resident.

Accommodation

You will be living in a residential property in Country A, supplied by your overseas employer. You will have sole use of this property and it will not be shared at any time.

You will be selling some of your furniture and renting out your family home in Australia via a real estate agent shortly prior to you departing Australia for Country A.

You have a home loan against your Australian property, where the rent you will receive will cover the required loan repayments.

Assets

You own three residential investment properties in Australia.

You will maintain Australian bank accounts to service your financial obligations in Australia.

You will not make any investments in Australia whilst you are living and working overseas.

You have sold most of your personal effects, and you will be taking the remainder with you to Country A.

You receive a superannuation income stream from the Commonwealth Superannuation Scheme (CSS), and you and your spouse will also jointly receive rental income from your Australian residential investment properties.

You have advised Australian financial institutions that you are a foreign resident so non-resident withholding tax can be deducted from any credit interest.

You intend on opening a bank account in Country A to receive your income payments, however you do not expect to acquire any other significant assets in Country A.

Your overseas employer is also providing a car for your personal use.

While in Country A, you intend to comply with any tax obligations imposed on you whilst you are living and working there.

Family and social connections

You have a spouse, who intends to join you in Country A and potentially also take up employment there either part way through your first year in Country A or towards the end of your first year in Country A.

Following your family home being rented out, your spouse will be living with your daughter in Australia until they are ready to join you in Country A.

You have two children who are of adult age.

Apart from your spouse, no other family members will be joining you to live in Country A. Your two adult children live and work in Australia.

You will not be maintaining any social or sporting connections with Australia.

You intend on maintaining a professional membership in Australia, as this membership is relative to your employment in Country A.

You may establish some social, sporting and professional connections in Country A.

You intend on acquiring a driving licence in Country A.

Employment

You will not have a position or job being held for you in Australia whilst you are living and working in Country A.

Both you and your spouse are not members of the Public Sector Superannuation Scheme (PSS) established under the Superannuation Act 1990.

Both you and your spouse are not eligible employees in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976.

You are not a spouse or a child under 16 of a person who is a member of the PSS or is an eligible employee in respect of the CSS.

Both you and your spouse were previously employed by the Commonwealth of Australia, with you both having ceased that employment a number of years ago.

Your spouse has recently commenced employment with the Commonwealth of Australia; however as a result of the new employment they have become a member of the Public Sector Superannuation Accumulation Plan (PSSap) which was established under the Superannuation Act 2005.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

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

Income Tax Assessment Act 1936 Subsection 6(1)