Private ruling: Residency - Leaving Australia
Published: May 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: You departed Australia for a working holiday overseas.

Ruling: Q1: Are you a resident for taxation purposes from the date you left Australia? | A1: No.


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)

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, and · the superannuation test. 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 will still be considered to 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 not residing in Australia as evidenced by: · you were residing with a relative overseas. Therefore, you are not considered to be residing in Australia. | Detailed Reasoning - The domicile test and permanent place of abode test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is established at birth when they acquire a domicile of origin, being the country of their father's permanent home. The domicile of origin is retained until such time as a domicile is established by choice or by operation of law in another country. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. A domicile may be changed by operation of law for example where a person has obtained a migration visa. In your case you have not indicated a permanent intention to change your domicile from Australia as you have no firm intentions to never return to Australia. 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. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. | Detailed Reasoning - In your case:: · you have advised that you have made a home for yourself with a relative overseas, · you maintain an association with Australia through your family and bank accounts, · you are working overseas, · you opened a bank account overseas, and Therefore, you are considered to have established a permanent place of abode overseas. | Detailed Reasoning - The 183-day test: This test does not apply to you as you have not been in Australia for more than 183 days in any year covered by this ruling. | 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. You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person. | Detailed Reasoning - Your residency status: As you are not considered to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident from the date of your departure from Australia.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | You intended for this holiday to be for X months in duration. | You intend to return to Australia eventually. | You have been using a relatives residence overseas as your base. | You have been making various trips to other countries from your base. | You have made limited return trips to Australia since your time overseas. | In the X year you intended to return to Australia but did not. | You have yet to return to Australia permanently. | You have lodged a return for the year ended 30 June 2009. | You have lodged a non-lodgement advice for the 30 June 2010 | You have supplied details of your income and a non-lodgement advice for the 2011 financial year. | You are a citizen of Australia by birth and a citizen of country A by virtue of your grandparent's origin. | You do not require a visa as you have European Union citizenship. | On your return trips to Australia you have stayed no longer than X to X days, for the purpose of visiting relatives | You hold a bank account overseas. | You previously lived in a permanent home with family in Australia. | You have bank accounts in Australia. | You do not have an employment contract, but when overseas you have worked for the same employer on a permanent casual basis. | You currently pay tax overseas. | Your social connections with Australia consist of family and friends. | You have never been a commonwealth employee or a spouse or child under 16 of a commonwealth employee.