Private ruling: Residence
Published: February 2012
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 January 2012

Ruling: Questions and answers: | Are you a resident of Australia for tax purposes from the day you leave Australia? | No

Relevant facts and circumstances: You are an Australian citizen Your country of origin is Australia You departed Australia in 2012. You have been working in Country X on a fly in/fly out basis You have been issued a visa for Country X on an indefinite basis. You family members have been issued visas for their period of stay. The purpose of you overseas stay is for employment purposes only. Your family intend to remain in Country X for 5 or more years. You have arranged for a rental lease in Country X. You will set up a bank account in Country X. Your assets in Australia include your home which will be rented, and a bank account that bears no interest. You have an employment contract which employs you on an ongoing basis, therefore, your employment contract has no specified end date. You will pay income tax in Country X on your employment income. Neither you or your spouse are contributing members of the PSS or CSS.

Relevant legislative provisions: 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 first two tests are examined in detail in Taxation Ruling IT 2650. 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 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'. Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are: · whether the person is physically present in that country at some time during the year of income · the history of the person's residence and movements · if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits · if the person is outside the country for part of the relevant income year, the purpose of the absences · the family and business ties which the person has with the particular country, and · whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there. You are no longer present in Australia after 1 January 2012. Your anticipated period of stay in Country X is 5 years. The purpose of your absence is to engage in permanent employment. Your spouse and children have accompanied you to Country X. You have entered into a lease agreement which becomes effective from 2012. On the weight of your circumstances, you are not a resident under the resides test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for 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. You have been issued a visa for Country X on an indefinite basis. You have established a legal right to remain in Country X on an ongoing basis. You have therefore acquired a domicile of choice whereby you can make your home indefinitely, you are therefore not a resident under the domicile test. | Detailed Reasoning - The 183 day test: Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent of abode is outside of Australia and they have no intention of taking up residence here. As you were not present in Australia for more than 183 days in any of the income years (from the time you left), you are not a resident under this test. | Detailed Reasoning - The superannuation test: A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds: · established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or · established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or · the spouse or child under 16 of a person covered by either of the above funds. In your case, neither you, nor your spouse are able to contribute to the abovementioned superannuation schemes. | Detailed Reasoning - Your residency status: As you do not meet any of the above tests, you are not a resident of Australia for tax purposes from when you leave.

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