Private ruling: Residency
Published: February 2014
Ruling period: Year ending 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2010

Ruling: Question and answer: | 1. Are you a resident of Australia for taxation purposes? | No. | 2. Are you entitled to a zone offset? | No.

Relevant facts and circumstances: You were born in Country Y. You are a citizen of both Australia and Country Z). You formed the intention on living in Country Z a number of years ago. You are employed by an Australian company. Your spouse and a child reside in Country Z. You have a home in Country Z. You fly to Australia to commence work at your own expense. You are in Australia x out of every xx weeks. You are working for the Australian company for at least 183 days each year. You do not have a home in Australia. You have bank accounts in Australia. You have a house, bank accounts car and household affects in Country Z. You stay with other family when you are in Australia and not working. Neither you nor your spouse are currently or have ever been Commonwealth government employees. You are over the age of 16.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1936 Section 79A | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that 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 in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: · the resides test · the domicile test · the 183 day test · 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 primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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'. You are living with your spouse and child in Country Z. You intend to live indefinitely in Country Z. You have purchased a home in Country Z. You work for an Australian company. You fly to Australia at your own expense x out of every xx weeks for work. You are not a resident under this test as you are not residing in Australia according to ordinary concepts. | Detailed Reasoning - The domicile test: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Your domicile is not Australia, while you are a citizen of both Country Z and Australia you have decided to reside in Country Z. You are not a resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You are in Australia for at least 183 days however your usual place of abode is in Country Z and you are living in country Z indefinitely. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Only Commonwealth Government employees are eligible to contribute to the PSS and CSS. As you and your spouse were never a Commonwealth Government of Australia employee you will not be a resident under this test. | Detailed Reasoning - Your residency status: You are not a resident of Australia for taxation purposes. | Detailed Reasoning - Zone tax offset: To be eligible for the zone tax offset under section 79A of the Income Tax Assessment Act 1936 you must be a resident of Australia for taxation purposes. Therefore you are not eligible for the offset as you are a non-resident of Australia for taxation purposes.