Private ruling: Residency status
Published: October 2011
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2010

Ruling: Question and Answer | Are you a resident of Australia for tax purposes for the duration of your stay in Country X? | No

Relevant facts and circumstances: You were born in Country Y and possess a Country Y passport. You moved to Australia at a very young age with family members. You are an Australian citizen. You and your spouse left Australia for Country X on date A in the 2009-10 income year. You have accompanied your spouse who is employed by a company in Country X. Your children attend school in Country X. You are renting a house in Country X. You have taken personal belongings with you including a computer, photo albums, toys, bikes and clothes. You did not take any furniture or white goods. You and your spouse sold the family home in Australia several months after leaving Australia as you intend to live in another state on returning to Australia. You intend to buy a house and have requested a friend to commence looking for a house for you. You plan to live in Country X until date B at the end of the 2012-13 income year. Your assets in Country X are a bank account and a dwelling which you bought as an investment and to offer to family and friends when they visit. You intend to sell the dwelling when you leave. Your assets in Australia include shares listed on the Australian Share Market and a considerable amount in cash/savings accounts and term deposits. These are primarily jointly held. You and your children intend to return to Australia for several weeks in the 2012-13 income year to visit family. Your spouse plans to join you and the children in Australia and as a family you will travel around Australia visiting friends and family. Your social and sporting commitments with Australia include email and ringing friends on a regular basis and keeping in touch through Facebook. You do not have any social or sporting commitments with Country X. You are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme.

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

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (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: · The resides test · The domicile test · The 183 day test | Detailed Reasoning - 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 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 dictionary meaning, 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. As you have resided in Country X since date A in the 2009-10 income year and it is your intention to reside there until date B, you are not a resident of Australia for taxation purposes under the resides test. | Detailed Reasoning - The domicile 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. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case you were born in Country Y but moved to Australia at a very young age with family members. You took up Australian citizenship and have demonstrated an intention to make Australia your home indefinitely. Thus Australia has become your domicile. 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. For the period date A to date B, it is considered that you will not be an Australian resident for taxation purposes under the domicile test for the following reasons: · You plan to stay in Country X from date A in the 2009-10 income year until date B at the end of the 2012-13 income year which is a considerable length of time. · You and your children have accompanied your spouse to Country X and thus your emotional ties are in Country X. · Your children are going to school in Country X. · You are living in one location with your family in Country X. · You have taken your personal belongings with you including a computer, photo albums, toys, bikes and clothes. · You have sold the Australian family home. · You have purchased a Dwelling in Country X as an investment and to offer friends and family when they visit. We have noted that you are living in rental accommodation with your family in Country X, and that you and your family have taken personal belongings to Country X but did not take any white goods. You intend to buy a house on return to Australia and have requested a friend to commence looking for a house for you and your family. Further, you have considerable cash and shares in Australia. You and your children are planning to visit Australia for several weeks in the 2012-13 income year. You and your family keep in touch with friends and family in Australia by phone calls and email. There is no evidence to make your home indefinitely in Country X. We are satisfied you have maintained your Australian domicile. However, you have accompanied your spouse to Country X and your children have moved there too. Thus your emotional ties are there. You are living in rental accommodation in the one location. The family home in Australia has been sold. You have purchased a dwelling in Country X for investment purposes and to offer friends and family when they visit. This further supports you have established a permanent place of abode in Country X. Even though you maintain an association with Australia through your family, friends and investments, your association with Country X is more significant. Your intention is to remain there for more than two years. Based on these facts, it is considered that you have established a permanent place of abode in Country X. As already mentioned a permanent place of abode does not need to be 'forever' or 'everlasting'. Thus you are not a resident of Australia under domicile test as you have established a permanent place of abode overseas. | Detailed Reasoning - The 183-day test: This test does not apply to you as it has been established that your usual place of abode from date A in Country X. | 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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. This test does not apply to you as you are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme. | Detailed Reasoning - Your residency status from date A to date B: From date A to date B as you are not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you are a non-resident of Australia for taxation purposes.

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.