Private ruling: Residency
Date of advice: 7 November 2018
Published: January 2019
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Are you a resident of Australia for income tax purpose? | A1: No. | Q2: Should your employer pay superannuation during your employment in Country BB? | A2: No. | Q3: Are there any implications for your Higher Education Loan Program (HELP) debt? | A3: Yes.

Relevant facts and circumstances: You were born in Australia. You are a citizen of Australia. You went overseas to work in April 20XX. You have a multiple entry one-year business visa. Your work contract overseas ends March 20XX, but you advise this may be extended. You rent accommodation overseas which is for your use together with your partner. You return to Australia for short visits. You do not have any dependants. You have Australian sourced income from renting your property jointly owned with your partner. You have a HELP debt. You are not eligible to contribute to the Public Sector Superannuation Scheme (PSS) or the Commonwealth Superannuation Corporation (CSS) superannuation funds. You have suspended your private health insurance.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1936 subsection 6(1) | Superannuation Guarantee (Administration) Act 1992 section 27

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. Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms ‘resident’ and ‘resident of Australia’, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will not satisfy any of the tests of residency. Accordingly you are not a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 for the period you are working overseas. Your income derived overseas is not assessable in Australia. Employers are generally required to make superannuation guarantee (SG) contributions for workers who are employees. There are some exceptions to this and these are listed under section 27 of the Superannuation Guarantee (Administration) Act 1992 . Although these individuals may be employees for SG purposes, their salary or wages are excluded for the purposes of calculating SG contributions. One relevant exception is for salary or wages paid to an employee who is not a resident of Australia for work done outside Australia, except to the extent that the salary or wages relate to employment covered by a certificate of coverage. In order to apply for a certificate of coverage there must be a bilateral agreement in place between Australia and the country the employee is working in. There is no such agreement between Australia and Country BB. | Detailed Reasoning - Please note:: Changes have been made to the HELP requirements. I refer you to the ato.gov.au webpage HELP and TSL overseas obligations for more information on this topic. This sets out your obligations to repay your debt as a non-resident of Australia for tax purposes.