Private ruling: Residency
Published: April 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Question and answer: | Will you be a resident of Australia for income tax purposes from the time you take up your overseas employment contract? | No.

Relevant facts and circumstances: You were born in country X and are a citizen of country X. You moved to Australia in YY and became a citizen of Australia in 200Z. You have children in Australia who live with your former spouse. During the current income tax year your employment was based in Australia until late 20VV. However, you travelled overseas on occasion during the year. You worked in country Y and another overseas country from late 20VV to early 20WW. You returned to Australia for a week in early 20WW before travelling overseas for a holiday. You are returning to Australia after your holiday and will then take up an employment contract in country Y. You are entering into an employment contract with a country Y based company commencing in early to mid 20WW which will be of an ongoing nature with no fixed term. You intend to live and work in country Y indefinitely and do not intend to return to Australia to live. You will have a work and residency permit which will allow you to live and work in country Y You will obtain private rental accommodation in country Y. Under your employment contract you will be required to make several business trips to Australia per year for short durations such as three to four days. You will stay at hotels provided by your employer on these occasions. Under your employment contract you will be entitled to four weeks annual leave, some of which may be spent in Australia visiting your children. You have a house in Australia that you intend to sell. You intend to purchase an investment property in Australia. Apart from your family you have no social or sporting connections in Australia. You have never been employed by the Australian commonwealth government.


Reasons for decision: Summary: Generally where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. The terms 'resident' and 'resident of Australia', in regard to an individual, are defined within the tax provisions and provides four tests to ascertain the residency status. Relevant to your situation are the first two tests which are examined in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia, a copy of which is available from www.ato.gov.au . | Detailed Reasoning - The resides test: Whether the individual resides in Australia according to the ordinary meaning of the word resides. In your case, you were living and working in Australia until late 20VV when you took up employment overseas for a period of months. You returned to Australia for a week in early 20WW before going on an overseas holiday. You will return to Australia after your holiday and then leave the country to live and work in country Y for an indefinite period of time. Based on the above, you have been residing in Australia for the majority of the current income tax year; however, this will not be the case from when you leave the country to take up your employment contract overseas. You will not be residing in Australia according to the ordinary meaning of the word and will not meet 'the resides' test from when you leave the country to take up your employment contract in country Y. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for income tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases. Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence. In your case, your domicile at birth was country X. However, you moved to Australia in XX and became an Australian citizen in 200Z. Therefore, your domicile is now Australia. You have not taken any steps to establish a new domicile in a country other than Australia. | Detailed Reasoning - Permanent place of abode: 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 a person intends to live for the rest of his or her life. As previously mentioned, you were living and working in Australia up until late 20WW when you took up employment overseas. You have worked in two different countries and travelled widely since that time and could not be said to have established a permanent place of abode outside Australia to date. However, when you leave Australia to take up your employment contract in country Y we note that: · your employment contract will be ongoing and will have no fixed term; · you intend to stay living and working in country Y indefinitely; · you will establish private rental accommodation in country Y; · you intend to sell your house in Australia and will have no residence available to you in Australia; and · you have no plans to return to Australia to live. Although you have family ties and financial ties to Australia, the Commissioner is satisfied that you will have a permanent place of abode outside of Australia when you take up your employment contract in country Y. Therefore, you will not be a resident of Australia under this test from that time. | Detailed Reasoning - Your residency status: You are a resident of Australia for income tax purposes until you leave the country to take up your employment contract in country Y. However, you will not be a resident of Australia for income tax purposes from that time as you will not meet any of the tests of residency.