Edited version of private advice

Authorisation Number: 1051663219586

Date of advice: 28 April 2020

Ruling

Subject: Residency

Question

Can the taxpayer continue to be considered a tax non-resident of Australia for the purposes of section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) from 1 July 20XX until 30 June 20XX?

Answer

Yes. Having considered your circumstances and the relevant factors, you are not considered a resident of Australia for income tax purposes from 1 July 20XX under section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) as you have not met any of the tests required to be considered a resident of Australia.

Question

Can the income received by the taxpayer while in Australia on compassionate leave be considered foreign sourced income and not included in the taxpayer's assessable income in accordance with section 6-5(3) of ITAA 1997?

Answer

Yes. All employees are entitled to compassionate leave each time an immediate family or household member dies or suffers a life threatening illness or injury. Leave received in this case is considered as paid personal leave and not income from performing services.

Question 3:

Can the taxpayer claim a foreign income tax offset (FITO) for tax paid in Country A in respect of an amount of employment income that is included in the taxpayer's assessable income?

Answer

Not applicable. As you are considered a non-resident for taxation purposes for the periods identified below, the income derived during time spent in Australia is considered foreign sourced. There is no requirement to include the employment income in an Australian income tax return and therefore no FITO eligibility arises.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You obtained a ruling dated XX/XX/20XX which confirmed you were a non-resident for taxation purposes from XX/XX/20XX to XX/XX/20XX.

You and your spouse moved to Country A and were employed by 'the company', a subsidiary of 'the head company'.

You were employed on a rolling year-to-year contract.

You obtained an employer sponsored visa which holds a validity of one-year.

You are not currently eligible to make an application for citizenship of Country A as you do not meet with the criteria identified in Country A's Law on Citizenship.

You have since renewed both your contract and visa four times.

Since first arriving in Country A in 20XX, you and your spouse were provided with a fully furnished apartment by your employer as you cannot legally purchase accommodation. This remained available to you at all times.

In the 20XX and 20XX income years, you returned to Australia for the following reasons.

·         For project work commissioned by your employer between XX/XX/20XX and XX/XX/20XX

·         Your parent's death in XX/20XX,

·         The settling of your parent's estate in XX/20XX, and

·         The diagnosis, care and death of your spouse between XX/20XX and XX/20XX.

You maintain that your intention was to continue living and working in Country A.

The days you were physically present in Australia in these years are as follows:

Whilst you were in Australia working on project work, you stayed in temporary camp accommodation; your spouse rented a beach house at this time.

Mid way through this work, you returned to Country A for the Christmas holiday.

Your return for your parent's funeral was for the duration of two weeks.

You were the co-executor of your parent's will.

You further returned to aid in settling their estate.

Whilst you were in Australia, your spouse was tested and diagnosed with a life threatening illness.

You remained with your spouse as they underwent medical treatment.

During your spouse's treatment, you stayed in hotels.

Your spouse was discharged late XX/20XX, at this time you planned on returning to Country A, departing through another Australian state (State B) as your spouse was planning to stay with their child.

Before you could depart State B, your spouse's condition worsened and you immediately travelled back to them.

You stayed in a furnished apartment near the hospital at this time which you rented on a weekly basis.

In XX/20XX, your spouse left hospital and returned to their child's house.

You returned to Country A on XX/XX/20XX.

You returned to Australia on XX/XX/20XX and rented a fully furnished apartment on a weekly basis.

You entered into a lease for an apartment in Australia with a coastal view as requested by your spouse.

You signed this lease in your name as your spouse was not able to sign due to their illness.

You arranged to have some family heirlooms delivered from the State B, however as your spouse passed away on XX/XX/20XX and you were not able to move into the apartment. You did not have the opportunity to unpack these items.

You were required to continue paying this lease until XX/20XX.

You stayed with family in Australia from late XX/20XX to XX/20XX. At this time, you returned to Country A.

You were the executor of your spouse's will and you and their child were the only beneficiaries.

Whilst you were in Australia, you were paid a salary and wage for your project work and were granted compassionate leave for the death of your parent, your spouse's illness and your spouse's passing.

You continued to accrue benefits with the head company and pay taxes whilst you were in Australia.

Upon your return to Country A in XX/20XX, you moved out of the apartment you shared with your spouse and moved into accommodation which you share with other expatriates.

This accommodation includes your own bedroom, bathroom, living area and fridge. You share a kitchen, gym and pool. You have purchased numerous appliances for this accommodation.

You retain a significant number of belongings in Country A and have joined sporting clubs, the local library and play in chess tournaments.

You also support your local sporting teams at the city stadium.

You are not on the Australian electoral roll.

You suspended your private health insurance upon your departure in XX/20XX.

Your employer provides you with full medical cover in Country A.

You reinstated your private health cover from XX/20XX until your departure on XX/20XX; this was for the period of your spouse's diagnosis and illness.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 Subsection 6-5(2)

Income Tax Assessment Act 1997 Subsection 6-5(3)

Income Tax Assessment Act 1997 Subsection 6-10

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