Private ruling: Residence
Published: March 2012
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2015 | Year ended 30 June 2014 | Year ended 30 June 2013 | Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Are you a resident of Australia for taxation purposes? | No.

Relevant facts and circumstances: You are a citizen of and were born in Australia. You are also a foreign citizen which you obtained through your parent. You left for Country X on XX April 20XX. You have a spouse visa for a foreign country. You have only returned once in this time to attend your siblings wedding. Your spouse is a foreign citizen with permanent Australian residency. You went to a foreign country to live and work to experience your spouse's culture. You are uncertain at this point when you will return to Australia. You have a permanent address in the foreign country. You intend to have children and may raise them in the foreign country. You currently have a 6 month work contract when it ends you will negotiate a full-time contract. You have a bank account in the foreign country. You have term deposit accounts in Australia. You lived in a share home in Australia prior to leaving for overseas and prior to the share home lived in your family home. You pay tax on your income in the foreign country. You have sporting and social connections with both Australia and the foreign country. You were a member of the PSS super fund but no longer contribute to the PSS.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1). | 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) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. Subsection 995-1(1) of the ITAA 1997 defines an Australian resident as a person who is a resident of Australia for the purpose 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. These tests are: o the resides test o the domicile test o the 183 day test o the superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650: 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 considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3rd 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'. 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. In your case you left to live and work in Country X on XX April 20XX. You are therefore not residing in Australia according to ordinary concepts and you are not a resident of Australia for tax purposes according to this test. | Detailed Reasoning - The domicile test: If a person has 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. | Detailed Reasoning - Domicile: There are essentially 3 types of domicile that an individual can have: · the domicile of origin; · the domicile of choice; and · The domicile of dependency. Basically, the domicile of origin of an individual is where the individual was born. 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. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. In your case, you were born in Australia and you are a citizen of Australia and of another country. Your domicile of origin is Australia. Therefore, you have not proven an intention to make the foreign country your home indefinitely and your domicile remains Australia. As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of 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. 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 left Australia to live and work in the foreign country You have a work contract which you will negotiate for full-time at the end of the contract You have gone to the foreign country with your wife to experience her culture You have a permanent place to live in the foreign country You have no plans at this stage to return to Australia in the near future The Commissioner is satisfied that you have established a permanent place of abode outside Australia therefore you are not a resident under this test. | Detailed Reasoning - The 183 day test: When 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 were not in Australia for more than 183 days during any financial year since leaving Australia and therefore 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. This test does not apply to you. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - Your residency status: You are a non-resident of Australia for taxation purposes. You are required to declare any income derived in Australia in your Australian tax return.

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